What Is an Insurance Coverage Gap?
In vendor compliance, a coverage gap is the difference between a required insurance limit and the available limit being evaluated.
What is a coverage gap?
In a vendor compliance workflow, a coverage gap is the shortfall between the insurance limit an organization requires and the available limit being evaluated for the vendor. If a requirement calls for $2,000,000 in General Liability and the available limit is $1,500,000, the coverage gap is $500,000.
Can a current COI still have a coverage gap?
Yes. Expiration and coverage amount are separate checks. A Certificate of Insurance can show a policy period that has not reached its listed expiration date while the available coverage limit is still below the organization's minimum requirement.
Important distinction
In insurance generally, the phrase “coverage gap” can describe several situations. On ZOQENA, it specifically refers to a requirement shortfall identified when available insurance information is compared with an organization-defined requirement.
Coverage Gap Example
Required coverage vs available coverage.
For a limit-based requirement, the gap is the required minimum minus the available limit.
Interactive Example
Change the requirement and available limit.
Required limit
Available limit
Result
Required
$2,000,000
Available
$1,500,000
Illustrative limit comparison only. Other policy terms and requirements may also need review.
Requirement Comparison
Current does not always mean sufficient.
A listed policy period and an adequate coverage limit answer two different questions. Vendor compliance requires checking both.
General Liability
Auto Liability
Project and client context
The same vendor can meet one organization's requirement and fall short of another because different projects, properties, and clients can define different minimum limits.
Resolving the Exception
What happens when a coverage gap is found?
Identify the shortfall
Compare the required insurance limit with the available limit and record the difference.
Request correction
The organization can request updated information or other action needed to address the requirement exception.
Review and re-evaluate
Updated documentation is reviewed and the applicable requirement is re-evaluated. Submission alone does not automatically change the compliance result.