The electrochemical and thermal stability of $LiNi_{0.8}Co_{0.16}Al_{0.04}O_2$ were studied before and after $Co_3(PO_4)_2$ coating. Different to conventional coating material such as $ZrO_2$ or AlPO4, the coating layer was not detected clearly by TEM analysis, indicating that the $Co_3(PO_4)_2$ nanoparticles effectively reacted with surface impurities such as $Li_2CO_3$. The coated sample showed similar capacity at a low C rate condition. However, the rate capability was significantly improved by the coating effect. It is associated with a decrease of impedance after coating because impedance can act as a major barrier for overall cell performances in high C rate cycling. In the DSC profile of the charged sample, exothermic peaks were shifted to high temperatures and heat generation was reduced after coating, indicating the thermal reaction between electrode and electrolyte was sucessfully suppressed by $Co_3(PO_4)_2$ nanoparticle coating.