You request a Certificate of Insurance for business from your tenants and your vendors. You look quizzically at them when they arrive on your desk. Your boss asks you to make sure that they are current and valid. You file them away and hope you remember to ask for them next year when they renew. You purchase access to systems that help you ensure they are current, maintain renewals, and organize and store them efficiently.
All the while you wonder, ‘Why is a Certificate of Insurance so important to my company, my boss, and to my job?’
A Certificate of Insurance (COI) is a snapshot of the holder’s insurance coverage at the point in time it’s issued. It lists all points of coverage including additional insureds. These are named parties the policy covers, but who are not the original holders of the policy.
By the way, that’s you.
Your real estate management company must be a named as an additional insured on all your tenant and service company insurance contracts. This protects your organization against risk and liability created by your tenants’, employees’, or service providers’ negligent acts.
Additionally, covering insurers must endorse any change to their policies. This effectively spreads the risk to your organization and its insurer. And let’s say things go badly on your property due to negligent tenants, their visitors, or your service providers. With a COI, your organization enjoys the same protections provided to them by their insurance companies.
Top 10 Secrets to Better COI Management
- Request a valid Certificate of Insurance for business from each tenant and vendor that shows your organization named as an additional insured. Then make sure you get it. And send them an example certificate so there’s no confusion.
- Place a formal request for your organization to be added as an “additional insured” on all your tenants’ and vendors’ general liability insurance policies. Then when you get the COI, carefully check the spelling of your company name to confirm it’s an exact match.
- Read the coverage limits on the COI. Ensure the limits comport with the insurance coverage requirements of your tenants’ leases, and service contracts executed with your vendors.
- Request changes to coverage limits if they do not meet the minimum requirements outlined in your own contracts and leases.
- Ensure that a tenant’s or vendor’s insurance company has actually endorsed the addition of your company as an additional insured. A COI is not an endorsement. So check the policy and get a copy of the endorsement from time to time.
- Read the endorsement carefully. Pay attention to amendments or exclusions noted on the endorsement or COI that change the coverage provided by the general liability policy.
- Record the coverage period for each policy as expressed on the Certificate of Insurance. Set a reminder in your calendar or your Operations Management System well in advance of the renewal date. This way you ensure you request an updated COI each year.
- Check any changes to required limits of coverage annually—both to your own policy and your tenant and vendor policies.
- Send copies of all certificates in electronic format to your insurance agent and insurance company.
- Purchase an effective web-based operations management system with a certificate of insurance tracking program to help you effectively manage this process.
Go Deeper on Certificates of Insurance for Business
For more insights into effective COI management, watch the Building Engines webinar: Risky Business: Keeping Your Insurance House in Order.