For many contractors, manufacturers, and professional service firms, collecting Certificates of Insurance (COIs) from subcontractors or vendors is standard operating procedure. But what’s often overlooked is how COIs are managed—and that’s where problems begin.
Poor COI management can lead to audit penalties, uncovered losses, and even lawsuits that should have been someone else’s problem. In this blog, we’ll outline the five most common COI mistakes we see and how to fix them with a smarter system.
What Is a COI and Why Does It Matter?
A Certificate of Insurance is a document that proves a subcontractor or vendor carries active insurance that meets your project or contract requirements.
Without valid COIs in place:
-
You may get charged for uninsured subcontractors during audits
-
Your own insurance may respond to claims that should be the sub’s responsibility
-
You could face contractual violations or breach-of-duty claims
❌ Mistake #1: Not Verifying Coverage Details
Collecting a COI is just the beginning. Too many companies stop here without checking if it actually meets the requirements.
What to check:
-
Does it include General Liability, Auto, and Workers’ Comp?
-
Are limits adequate for your project size?
-
Are you named as an Additional Insured?
-
Does it include a Waiver of Subrogation, if required?
❌ Mistake #2: Accepting Expired COIs
A certificate received at the start of a project might expire halfway through. If an incident occurs when coverage has lapsed, you could be on the hook.
Pro Tip:
Use an automated system (we offer one) that tracks expiration dates and sends reminders before coverage lapses.
❌ Mistake #3: Storing COIs in Inaccessible Formats
Folders full of PDFs and paper files won’t help you in an audit or a claim scenario. If you can’t pull the right COI quickly, it might as well not exist.
Better solution:
Centralize COIs in a digital dashboard that’s searchable, sortable, and sharable with your audit team or legal counsel.
❌ Mistake #4: No Subcontractor Agreement to Match
COIs are only part of the picture. Without a formal subcontractor agreement, you can’t enforce indemnification or verify risk transfer.
What we recommend:
Pair COIs with signed agreements that include:
-
Hold harmless and indemnification language
-
Insurance requirements
-
Clear terms for ongoing projects
❌ Mistake #5: Not Reviewing COIs During Renewal
Many businesses forget to re-check subcontractor COIs when their own policy renews. This leads to gaps when policy limits increase or endorsements change.
Fix it:
During renewal season, ask: Do all my subcontractors still meet our requirements? If not, it’s time to collect updated documentation.
Real-World Example
A client with 47 subcontractors fails an audit because 12 COIs had expired mid-project. The result? A $28,000 audit surcharge.
Take the Headache Out of COIs
If COI compliance feels like a paperwork nightmare, we can help you simplify it—while protecting your business from surprise audit bills and denied claims.
Schedule a COI Compliance Consultation
Request a Copy of Our Indemnification Clause Checklist
Schedule a Meeting With Us to Learn More About Our COI & Audit Protection Tools
