The cost of uninsured claims and lawsuits due to lapsed insurance or the incorrect endorsement could have a damaging financial impact on a contractor’s bottom line. If a company is collecting certificates of insurance (COIs) simply to confirm they have been received, there is no guarantee that all of the contractual requirements have been met. Tracking and managing certificates of insurance to confirm all limits, endorsements and requirements are in place allows a company to transfer costly claims and exposures to the appropriate party.

Each year, the construction industry continues to grow more automated—better connecting the jobsite and the office. More recently, this trend toward automation has extended to software that handles one of the industry’s more time-consuming risk reduction processes: collecting and verifying COIs from subcontractors and suppliers.

When purchasing risk avoidance products, it’s important that the tool pays for itself. Business owners should consider:

  • How much does a typical lawsuit cost?
  • How much is the time worth of an employee who spends the day tracking down certificates?
  • What’s the cost of the company’s safety reputation?

Competition within the COI tracking software industry is fierce, and pricing models reflect this, with many cost-effective options available based on the level of services required.

Certificate of insurance software companies can simply provide a software solution to help manage a company’s current process, or they might have a team that operates as an outsourced COI management department. Different companies offer various levels of problem resolution. One may specialize in the third party aspect of compliance review, while another may only offer a place to store certificates.

Regardless, the results of diligence can be staggering. When companies begin working with COI tracking software, it’s not uncommon to find compliance levels as low as 40 percent. Often this is due to lapsed coverage, or a lack of verifying that the coverage identified in a COI meets the contract requirements. In most cases, critical items such as additional insured and completed operations endorsements have not been collected. When the correct COI management solution is put in place, it’s possible to exceed 90 percent compliance relatively quickly.

Questions to Ask Before Researching COI Management Solutions

Before a decision is made to hire a tracking software company, companies should take a look at existing procedures.

  • How are certificates collected?
  • Is anyone verifying that the certificates are matching contract requirements?
  • What is the level of insurance knowledge for the person managing the compliance?
  • Can that person read the endorsements and policy forms?
  • What happens when a certificate does not match?
  • Is anyone collecting and monitoring certificates for second- and third-tier subcontractors?  

How COI Tracking Software Handles the Process

When considering a COI management solution, it’s important to know who the system works with to collect certificates. Some software companies request the required certificate from the subcontractor, while others expect the construction company to upload the certificate into the software. The most effective way to get the COI is to request it directly from the subcontractor’s insurance agent. For a lot of people, “insurance” can seem like an entirely different language. Making sure that a tracking company is staffed with professionals who can speak the same language as the insurance agent allows for the most correct certificate collection the first time.

Once a certificate is received, some COI tracking platforms can actually “read” it—identifying expiration dates, policy numbers, policy limits and many other requirements—and then verify these details against the contract requirements. Software without a document reader requires a staff member to enter information from the certificate and then verify compliance manually.

Many COI management solutions can assist when a certificate of insurance does not match contractual requirements. With an automated system, an email or letter will go out to the subcontractor or its agent for resolution. Or, if the COI tracking vendor is acting as a third-party administrator, it might call for a quicker resolution. Regardless, good communication is key to this process. Subcontractors and suppliers are vital partners in the success of any construction company, and it’s important to make sure that a prospective COI tracking vendor can meet customer service requirements.

Finally, most COI management systems help companies remain compliant by performing scheduled tracking to confirm that policies have not lapsed and coverage has not been cancelled.  

Easy Access to COIs and Reporting

Another convenient feature of most tracking systems is the ability to store certificates in a centralized location. Whether a company manages 25 certificates or 2,500, a COI tracking system can quickly and easily find the certificates needed for an audit or claim. Cloud-based solutions are even more convenient because they allow representatives to access certificates from anywhere with Internet access. Imagine having all certificates for completed operations, notes and phone conversations regarding the project in one easy location.

Many of these systems also offer reporting functions that enable all departments to see real-time compliance verification. The flexibility of a cloud-based solution can give project managers quick insight to compliance before allowing a subcontractor onsite, or accounting can verify compliance before cutting a check.  

Protecting Every Layer of the Business

As the construction industry continues to recover, the need to use second-tier and third-tier subcontractors on projects has increased. This can expose companies to increased risk of loss when the insurance of these lower-tier subcontractors is not monitored. Certificate tracking software can be a solution to this problem by making it easier to track, manage and verify COIs against a company’s requirements for lower-tier contractors.

Laura Phillips is partner relationship manager and Kristen Nunery is CEO and founder of Indianapolis-based myCOI. For more information, email or