What Is a Certificate of Insurance?

What Is a Certificate of Insurance?

People working in commercial real estate know they have to track a plethora of information. Moving parts include tenant payments, rent escalations, lease expirations, maintenance requests — and on top of everything else, certificates of insurance.

Abbreviated as COI, a certificate of insurance verifies the existence of an insurance policy and lays out the coverage in detail. A COI is an essential step in protecting your assets and managing risks for owners and managers of commercial real estate. 

Why Certificates of Insurance Matter

As a commercial real estate manager, you must ensure that each of your tenants lists you as an additional insured on their insurance policies. Most lease agreements contain clauses that require COI verification requiring tenants to have and maintain valid insurance coverage as well as the type and extent of coverage, and failing to do so could constitute a breach of contract.

Even though you may have insurance for your property, it’s important to confirm that those with whom you regularly do business are adequately insured for their specific type of operation. A restaurant will have different insurance needs compared to a medical clinic. Examples of coverage include worker’s compensation, auto liability, and pollution liability.

How to Validate a COI

COIs are typically requested directly from the insurance company rather than the policyholder. Make sure that the insured’s name on the certificate matches the tenant. Verify that their coverage complies with the terms outlined in your lease. You’ll also want to check the dates the coverage is valid. If it expires before your tenant’s lease expires, you will need to request an updated COI.

What COI Information Must Be Tracked?

Tracking information can cause a headache, and you might feel tempted to just take people’s word for it and trust that they have insurance. However, having a COI in hand not only allows you to verify their coverage — it’ll also help you keep track of vital information, such as:

  • Policy coverage dates
  • Type(s) of coverage
  • Limits of each type of coverage

COIs include many moving parts. While obtaining the COI is a necessary first step, it is really only accurate the day you receive it. The insured party is free to cancel or alter their coverage at any time — or they could forget to pay their premium with you being none the wiser.  

Even as a certificate holder or additional insured, most policy provisions do not convey to you any rights. If an insurance policy changes or ceases, nobody is obligated to inform you. Therefore, as a commercial property manager, it’s your responsibility to stay on top of the data.

Use STRATAFOLIO to Keep Track of Certificates of Insurance

Historically, property managers had to track this information by hand, manually obtaining and maintaining data from tenants and stakeholders. A manual process like that is not only tedious — it has the potential for misplaced and overlooked information.

Thankfully, nowadays there are programs like STRATAFOLIO to help property managers track and automate COIs and insurance policies, among a wealth of other information. With STRATAFOLIO, you can easily incorporate insurance requirements into a lease and get visual and email alerts when policies are about to expire. Contact us to schedule a demo now!

What Is a Certificate of Insurance?
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What Is a Certificate of Insurance?
Learn about the importance of certificates of insurance in commercial real estate and how COIs can protect your assets and reduce risk.
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