AGENCY CORNER: C.O.I. and A.I.

By Jack Williams

Our job as agents is to protect you!

As an agent, I’m often approached by clients requesting to issue documentation providing proof of coverage or extending coverage to third parties they do business with. Issuing certificates, either proof of coverage listing the third party as “certificate holder” or extending coverage through “additional insured” status is a core service that agencies provide daily, BUT do you understand what you’re signing up for when requesting that coverage be extended to a third party? Let’s dive into this topic a little bit with some basics that will hopefully broaden your insurance knowledge.

CERTIFICATE OF COVERAGE (C.O.I.)

A certificate of insurance “C.O.I.” is proof of coverage, the official documentation issued by an agent which verifies to the certificate holder (the third party requesting proof of coverage) that “You” do in fact carry the limits requested by the certificate holder at the date of issuance. Business owners that contract with any third party whether to perform a service or have a service performed for them should always at the very least request a C.O.I. to make sure that the party they’re doing business with is covered for the liability of the service being provided. This is a sound business practice that most companies follow. However, something to keep in mind is that “certificate holders” are NOT notified if the coverage either lapses or is canceled. For example, let’s say you hire a subcontract hauler for a three-month contract beginning October 1st. Well, on October 1st, the sub-hauler did have commercial auto coverage, but what happens if the hauler allows his coverage to lapse on November 1st? Odds are you won’t be notified by the sub-hauler as insurance documents and contracts are in the rearview mirror of the job at hand. Now, let’s say this sub-hauler gets into an auto accident and not only injures the other driver but totals out the other vehicle…now what?

Well, you now become liable for that accident. But, what if, before signing the contract with the sub-hauler, you requested “additional insured” status?

ADDITIONAL INSURED STATUS (A.I.)

Additional insured status is a provision to include as an insured “any person or organization that the named insured (you) is obligated by virtue of a written contract or agreement to provide insurance such as is afforded by this policy and is approved by the company in writing.” Additional insureds are extended coverage under the sub-haulers policy, which means that in the scenario above, where coverage either lapsed or canceled mid contract and the logger wasn’t notified and ultimately became liable for the auto accident, the logger would now be notified and could terminate the contract immediately.

So often, clients ask that we add a third party as additional insured when they only need proof of coverage or request that we provide proof of coverage when the additional insured status is required. The easiest way to avoid these issues is to have a conversation with your agent and ask questions if you aren’t sure about what the other party is requesting; our job as agents is to protect you!

Jack Williams Agent, FMIC Insurance Company

Photo Credit: FMIC Staff Photographer

Meet Jack Williams, FMIC Agent for Mississippi

Jack has been in the insurance business for 16+ years, originating in retail, commercial insurance before joining Forestry Mutual. Jack wanted a challenge and a change in his career. A challenge and change that Forestry Mutual was able to offer. Jack feels very lucky to have found a company like FMIC that has allowed him to build a new career and growth opportunities in his home state of Mississippi.

Jack grew up in Hattiesburg, MS, married to Sara for fifteen years, has two boys who enjoy sports and robotics, and are parishioners at St. James Catholic Church in Gulfport, Mississippi.