Why Do Companies Require A COI?
When hiring a contractor or working with a vendor, companies will often ask for a certificate of insurance (COI). The whole COI process can feel awkward, especially if you’re not sure what you’re being asked to provide or why it matters.
Here's the thing: asking for a certificate of insurance COI isn't confrontational. It's standard business practice that protects everyone involved.
What Is a Certificate of Insurance?
A certificate of insurance is a one-page document that summarizes someone's insurance coverage. Think of it as a snapshot of their insurance policy, not the actual policy itself. It shows what types of insurance coverage they carry, the policy limits, effective dates, and who's listed as the certificate holder.
The insurance company or insurance agent issues the COI on behalf of the insured business. It's an official legal document that proves they're properly insured without requiring you to review a 50-page policy.
Why Do Companies Ask for COIs Instead of Full Insurance Policies?
Full insurance policies are long and filled with legal language. A COI gives you the essential information in a format that's easy to scan. You can quickly check if someone has adequate insurance coverage without wading through exclusions and endorsements. Insurance providers can generate COIs in minutes, while entire policies create unnecessary delays.
Why Would a Company Ask for a COI?
Companies require COIs for risk management. When you hire a contractor, their actions could create liability for your business. If they cause property damage or injure someone, you need to know they have insurance coverage to handle the claim.
Without proof of insurance, you're left exposed. If something goes wrong and they don't have coverage, the financial protection falls to you. A COI confirms they have the necessary insurance coverage before work begins. It's also about contractual obligations: most business partners include insurance requirements in their contracts. Learn how to ask for a COI and more on when you need one here.
Who Is Required to Provide a COI?
Anyone performing work for your company who could create liability should provide a COI. This includes contractors, subcontractors, vendors, and consultants. If they're coming to your job site or using your facilities, they need proof of business insurance. Small business owners working as independent contractors need COIs just like larger companies.
Why Is a COI Important?
A certificate of insurance creates accountability. It's documented proof that someone carries adequate insurance before they start work. This matters because policies sometimes lapse or carry lower policy limits than required.
It also simplifies insurance tracking. Instead of chasing vendors, you have a standardized document showing coverage details you can reference throughout the project.
What Happens If I Don't Have a COI?
Without a COI, you don't know if the contractor carries workers' compensation coverage or liability insurance. If something goes wrong, you could face direct liability for damages that should have been covered by their insurance policy. You also risk violating legal and regulatory requirements that mandate proof of insurance for third-party work.
When Should You Request a COI from a Third Party?
Request a COI before work begins. The certificate should be in your hands before a vendor steps onto your property. This gives you time to review coverage and avoid last-minute issues.
Request updated COIs when policies renew, since insurance coverage renews annually. Also request new certificates whenever contract terms change.
What Coverage Should You Look for on a Certificate of Insurance?
Start with general liability insurance, which covers property damage and bodily injury claims. Most contracts require $1 million per occurrence and $2 million aggregate.
Workers’ compensation is required if the vendor has employees. This protects you if one of their workers gets injured on your job site. Auto liability coverage matters if vendors use vehicles. In that case, look for $1 million combined single limits.
Umbrella or excess liability provides additional coverage above primary policies. For high-risk projects, this ensures adequate insurance coverage if claims exceed standard policy limits.
How Can You Request a COI Without Making Things Awkward?
Frame your request as standard procedure, not personal doubt. Say: "As part of our vendor onboarding process, we'll need your current certificate of insurance showing general liability and workers’ comp coverage."
Be specific about what you need. List exact coverage types and minimum limits. This prevents back-and-forth and helps vendors provide the correct insurance documentation on the first try.
What Should You Say When Asking a Vendor for Their COI?
Keep your request straightforward:
"To complete our vendor agreement, please provide a certificate of insurance listing [your company name] as the certificate holder. We require proof of general liability ($1M per occurrence/$2M aggregate), workers’ compensation (statutory limits), and auto liability ($1M combined single limit). Please have your insurance provider send this to [email] by [date]."
This language is clear and non-confrontational. Most vendors appreciate the clarity.
Simplify COI Management with illumend
If tracking insurance certificates across multiple vendors feels overwhelming, illumend, powered by myCOI, removes the friction. The platform empowers you to send one-click vendor invites that guide them through providing their COI without portals or logins.
Lumie™, the built-in AI guide, explains insurance requirements in plain language. You'll get real-time compliance decisions with proactive alerts when coverage is about to expire. For construction teams, illumend integrates directly with Procore to streamline insurance tracking.
Built on 15 years of insurance compliance expertise, illumend empowers you to manage vendor compliance with confidence. Request a demo to see how the platform simplifies risk management for your team.
