There are a lot of things that can go wrong when dealing with certificates of insurance (COIs). Mistakes are made, things fall through the crack and some important details are completely overlooked. The checklist below covers the most common problems found in the collection, evaluation, notification and monitoring of COIs.
By law, the Insured (tenant, vendor, contractor, etc.) cannot issue its own COI. It must come from a licensed insurance broker. If there is any doubt about the source or veracity of the COI you have received, call the Insured's broker.
Having a COI in hand doesn't necessarily mean you have properly protected yourself against risk, and one size doesn't fit all. Determine the relative risk of each Insured and develop insurance coverage guidelines aligned with the nature of the risk.
An Insured who is not in compliance must be notified and followed up. This means lines of communication must be established and procedures put in place to make certain the Insured responds and complies with your requirements.
Often this task is looked upon as nuisance paperwork and doesn't get the attention it deserves. Designate one or more individuals to take possession of this important business process and hold them accountable.
All too often vendors begin the job, or the tenant takes possession of the space before you have received all the necessary paperwork. Establish a formal, consistent procedure for processing all new Insureds.
COIs expire at the end of the policy period. Do you have a system in place to monitor this important information and act upon it? Is it working?
Can you evaluate the success of your current COI management program? If you don't know how you're doing you probably aren't doing the best job possible.
There are a lot of moving parts to COI tracking, and you need a certain level of insurance knowledge and discipline to do it properly. Be honest about your own capabilities. Often your own insurance broker will take on the task, and there are outsourced COI tracking firms that can help.
Following these basic steps can make all the difference between best-practices risk transfer and potentially catastrophic risk exposure. Don't be caught by surprise!