Why Most COIs Fail—and What Property Managers Must Do Instead

Key Takeaways:

COIs are not legally enforceable
90% of COIs are initially incorrect
Anyone can issue a COI—with little oversight
The real risk lies in poor contracts
COIs must be matched to the contract

What’s the value of a certificate of insurance (COI) to property managers? To answer that question visually, Joe Markling, president of C7 Advisory Group, held up a sample COI and tore it in half and said they’re “basically worthless on their own,” to attendees of his session, “COI Red Flags: What Property Managers Miss, and What It Costs Them,” during Day 1 of the 2025 BOMA International Conference & Expo. People may not want to hear that message, because management agreements require that owners and managers review and audit them—and that they’re accurate.

The problem, Markling noted, is that “the minute they’re handed to you, they’re already wrong, expired, or cancelled.” In other words, COIs may serve as a snapshot in time, but they are not enforceable in court.

That doesn’t mean you can just ignore them altogether, however. It’s a key requirement for property managers, and “if you just blow it off and don’t do it and there’s a loss, that’s negligence. There’s no gray area there. You have to do it whether you like it or not,” Markling asserted.

He spent the balance of his time repeatedly emphasizing one key point: what matters most is the contractual language requiring specific insurance coverage and how well the contract mitigates that risk—not a certificate proving coverage exists.

“You don’t realize they’re a problem until you have an incident and a loss and find out the problem was within the contract,” he said.

Case in point: Markling shared a real-life example of where a $24 million uninsured loss occurred because a vendor with no formal contract in place accidentally burned down a property—it was just a “favor” from one contractor to another. In that situation, the COI was irrelevant because the absence of a contract invalidated any insurance claim.

Red Flags and Industry Pitfalls

According to Markling, one of the most concerning truths about COIs is how frequently they are incorrect. In fact, he estimates that 90% of COIs are wrong upon first submission, and many of them are never fully corrected. Part of the problem lies in how loosely these documents are regulated, in that just about anyone can issue them, from brokers and consultants to in-house staff, often by simply filling in arbitrary numbers. “Practically anyone can fill one of these out. There is no rigorous oversight to ensure their accuracy or validity,” he said.

Even more alarming is the misconception about what COIs actually do. Contrary to popular belief, COIs don’t offer any legal rights or protections. A policy could be canceled the very next day, rendering the certificate meaningless.

Again, the real issue isn’t the COIs themselves, but rather the contracts behind them. Markling emphasized that most insurance-related failures occur because the underlying contracts are poorly written or, in some cases, completely absent. Without a strong, well-crafted contract that accurately reflects the level of risk and clearly outlines insurance obligations, even the most pristine COI is essentially worthless.

Steps Every Property Manager Should Take with COIs

While COIs can’t be ignored, there are steps property managers can take to ensure that they’re as accurate as possible and in line with the contract so that they don’t miss out on potential benefits. For example, Markling noted that coverage for an event like a hurricane may be specified as “per event” but if “per location” isn’t also specified, you may get $1 million for multiple properties in the affected area, vs. $1 million for each.

Here are other steps property managers should take when evaluating COIs:

Check COIs against the contract. Ensure they match contractual requirements (e.g., coverage amounts, named insureds).
Verify key details such as named versus additional insured. “This is huge to get correct,” Markling said. “It’s the most important thing to get right.” He said most people don’t realize that a general insurance policy automatically names property managers in their coverage. Other things to look for are policy dates, limits, deductibles, exclusions, and the issuing insurer’s AM Best rating. Markling also recommends checking for critical terms like waiver of subrogation, primary/non-contributory language, and per occurrence vs. claims-made.
Understand risk by vendor. Not all vendors require the same level of insurance, Markling noted, so it’s important to match policy requirements to the actual risk (e.g., torch work versus toilet repair).
Document everything. If something goes wrong, property managers will be asked to produce records. Even a bad COI is better than no attempt, Markling noted, because it shows an attempt to document risk, unlike the aforementioned $24 million uninsured loss where there was no documentation at all.
Educate and push vendors. Small vendors may not understand what’s being asked of them, but it’s your job to require proper coverage.

Bottom Line

“The goal of a contract is the transfer of risk,” Markling explained. “You’re trying to push the risk as far away from the owner as possible. What you never do is to take a COI and toss it into a file” and forget about it.

At the end of the day, Markling’s message was to not get too hung up on the COI’s themselves, but rather to focus on strong contracts and matching the COI to contractual risk. “A COI is not protection—it’s evidence of protection. And without the right contract, that evidence is meaningless in court,” he concluded.