Anything that causes injury or property damage could lead to a liability lawsuit. Ensuring that the third parties you hire have the necessary liability insurance is crucial for both your financial and regulatory protection, as well as theirs.
Follow along as we cover the basics of liability insurance, the major differences between a certificate of insurance service and liability insurance policies, and how the two work together to provide important protections.
What Type of Insurance Is Liability?
Liability insurance is a type of insurance coverage that protects individuals and businesses from potential legal and financial obligations brought on by claims of negligence or wrongdoing.
Specifically, it protects against liabilities arising from bodily injury, property damage, or personal injury caused to others. When a policyholder is held liable for one of these cases, their liability insurance provides financial protection by covering the costs of things like legal defense, settlements, and judgments.
Liability insurance is an important concept that allows individuals and businesses to mitigate the financial risks of their work and protect themselves against potential claims.
What Are the Two Parts of Your Liability Insurance?
Liability insurance typically consists of two main parts: bodily injury coverage and property damage coverage. These two pieces work together to provide financial protection if you are held legally responsible for causing injury to someone or damage to their property.
Bodily Injury Coverage
This part of liability insurance covers harm or injuries caused to another person. Suppose you are found legally responsible for causing a bodily injury to someone, but you have liability insurance in place. In that case, the policy will help cover the costs associated with things like medical expenses, rehabilitation, and potentially lost wages.
Property Damage Coverage
The other part of liability insurance covers damage caused to someone’s property. If you accidentally damage someone’s property and are held liable, you’d better hope you have liability insurance. If you do have liability coverage, it will take on the repairs or replacement cost, as well as the potential legal defense costs if you are sued due to the damage.
What Is a Certificate of Insurance?
A certificate of insurance, or COI, is a document proving that someone has insurance coverage. COIs are issued by the insurance agency providing the policy to the policyholder receiving the coverage. They’re typically used to provide proof of insurance coverage to prospective employers.
Is COI the Same Thing as Liability Insurance?
No, a certificate of insurance / COI is different from liability insurance. While a COI may include information about liability insurance, it is not the insurance policy itself.
Liability insurance is a type of insurance coverage that, as we’ve explained, protects individuals or businesses from legal liabilities stemming from claims of injuries, property damage, or negligence.
On the other hand, a certificate of insurance is a document that provides evidence of insurance coverage, in this case, of liability coverage. A COI is not the policy—it’s the proof.
The documents work together because a COI could not exist without a corresponding policy to summarize and provide evidence.
Read this blog on “how to ask for a certificate of liability insurance“.
What Are COI Liability Insurance Services?
Now that we’ve discussed the difference between liability insurance and certificates of insurance or COIs, let’s talk about how you can best manage liability insurance COIs, which, depending on your industry, you could see a lot of.
COI liability insurance services are services provided by companies that specialize in managing and verifying COIs for liability insurance. Services like myCOI’s aim to streamline the process of requesting, collecting, reviewing, and tracking COIs from vendors, subcontractors, or other third parties to help you ensure compliance with insurance requirements.
There are many benefits to COI liability insurance services. Here are five:
- Certificate verification. They help you easily verify the authenticity and accuracy of each COI you receive. myCOI’s software even flags potential issues you might have missed.
- Compliance management. They help businesses stay compliant with contractual and regulatory insurance requirements.
- Automated processes. They can automate many of the mundane, error-prone pieces of the COI tracking process. For example, we’ll proactively notify you when your certificates need to be updated or renewed.
- Risk mitigation. By making sure that vendors and contractors have valid liability insurance coverage, COI services can help you mitigate the risk of potential claims, lawsuits, and financial losses that result from inadequate insurance protection.
- Enhanced efficiency. Ultimately, they streamline the entire COI management process, not only cutting down on the number of calls and spreadsheets you have to deal with but, importantly, the number of claims.
How myCOI Can Help
COI liability insurance services help businesses effectively manage and track their COIs, keeping them compliant and minimizing their potential risks.
By leveraging myCOI’s specialized services, your business can save time, improve accuracy, and reduce the administrative burden associated with COI management. Contact us to find out how.
