Certificates of Insurance vs. Endorsements: What Employers Should Know

As an employer working with contractors, vendors, or third-party service providers, you may frequently encounter the terms 'Certificate of Insurance' (COI) and 'endorsement'. While both are crucial for risk management, they serve different purposes that are vital to understand in order to protect your business from potential liabilities.

Do you know if a COI is enough, or should you request an endorsement? This is the question we'll explore by breaking down the key differences between COIs and endorsements, explaining why each matters, and providing actionable steps for employers.

What Is a Certificate of Insurance (COI)?

A Certificate of Insurance (COI) is a summary document issued by an insurer that confirms a business or individual has active coverage. Key details typically found in a COI include:

• Policyholder’s name
• Coverage types (general liability, workers’ comp, auto, etc.)
• Policy limits and effective dates
• Insurer’s contact details

Requesting a COI before hiring a third party ensures that they have the necessary coverage in place, thus reducing potential liability risks for your business.

Understanding Endorsements (Policy Modifications)

An endorsement, also known as a rider, is a modification to an existing policy that adds, removes, or alters coverage terms. Common examples of endorsements include:

• Increasing policy limits
• Adding an additional insured (e.g., listing the employer on the contractor’s policy)
• Expanding protection to cover new risks

Endorsements ensure that coverage aligns with specific needs, particularly when additional protection is required beyond what the standard policy provides.

Highlighting Key Differences

Understanding the distinction between COIs and endorsements is crucial:

• A COI serves as proof of existing insurance but does not alter policy terms.
• An endorsement legally modifies a policy and can add or remove coverage.

Employer Best Practices

To ensure proper coverage, employers should take the following steps:

• Always request a COI before engaging contractors or vendors.
• Review COI details carefully, checking policy limits and expiration dates.
• If additional coverage is needed, request an endorsement to ensure proper protection.

In summary, understanding COIs and endorsements in business contracts is important. A COI confirms coverage, while an endorsement ensures that coverage meets specific needs. Review your insurance requirements carefully and consult with a qualified insurance professional before hiring third parties.