What is a certificate of insurance (COI) for vendors?
A COI for vendors is proof of insurance coverage issued by the insurer. It's typically a one-page document that summarizes the type of insurance coverage, policy limits, and effective dates. It might also be called an ACORD certificate of liability insurance or COI.
A vendor is a company that sells goods or services. For example, a vendor could be a marketing agency, a manufacturer, or a catering company.
If you provide goods and services to other companies, they might require a vendor certificate of insurance from you for general liability or general liability professional liability, depending on the type of work you do. You may also use vendors to supply your business. In that case, you'll want to require COIs so you have a record of their liability coverage to make sure they have insurance.
Why do vendors need a COI?
Vendor certificates of insurance validate that a business is protected financially in case something goes wrong. Vendor COIs typically offer proof of liability insurance, which covers bodily injury and property damage.
For example, if you own an event planning company, you should get proof of vendor liability insurance from anyone providing a service to you, such as caterers, florists, and entertainers. You may also have to provide a vendor COI to venues you rent to prove that you have coverage in case of property damage or other issues.
Some businesses might have vendor insurance requirements that they get added to the vendor's policy as an additional insured. Being added to the policy validates that the coverage will protect them financially if something occurs.
What's included in a vendor certificate of insurance?
A vendor insurance certificate is a standard form that summarizes your coverage. The form includes the following:
- Producer: The name of your insurance agent or broker.
- Contact: Agent or broker's name, phone number, and email.
- Insured: The policyholder.
- Insurer: Insurance company or companies that issued the policy or policies.
- Coverages: The type of insurance you carry and whether you have additional insureds. The following types will be listed, and the type of coverage will be marked and filled in with specific details:
- Commercial general liability
- Automobile liability
- Umbrella liability
- Excess liability
- Workers' comp and employers liability
- Policy numbers: The policy number for each type of insurance.
- Effective dates: Start of coverage and expiration dates.
- Limits: Policy limits itemized according to your coverage. For example, a commercial general liability policy may provide per-occurrence coverage with a limit of $1,000,000 for a single accident. The form also details policy limits for property damage, medical payments, and personal and advertising injury.
- Certificate holder: The entity or business that requested your COI.
What type of insurance should a vendor have?
It depends on the type of work they do, but most vendors should consider general liability insurance to cover injuries and property damage. This coverage protects both vendors and their customers if something goes wrong. For example, if you are delivering goods to a customer and break their loading dock by accident, general liability would pay to repair it.
Other coverages a vendor might need are workers' comp and commercial auto to cover employees and vehicles.
How do I get a vendor COI?
Progressive Commercial lets you request your vendor COI via phone or your online account. If you don't have insurance yet and a customer is asking for proof of vendor insurance, Progressive Commercial can help you find affordable coverage and put a policy in place quickly.
How to request a COI from a vendor
Requesting a COI from your vendors is a simple but essential step in protecting your business. Ideally, you would communicate this requirement in the contract phase. You can also ask to be included as an additional insured, which extends their coverage to you. This means that you are financially protected if the vendor causes damage or injuries while providing goods or services on your behalf.
When asking for a vendor COI, be specific about:
- Required coverages
- Minimum policy limits
- Whether your business should be listed as an additional insured
Issues to avoid when requesting vendor COIs
One mistake a company can make is not adequately reviewing and managing COIs from vendors. If you work with vendors, you should confirm that they have policies in effect and are adequately covered. Be sure to review the COI closely for the type of insurance and effective policy dates. A lapse in coverage could cause a financial loss for your company if a vendor makes a mistake or causes property damage.
