8 Tips to Make Collecting Certificates of Insurance

Certificates of Insurance are one way of ensuring that contractors have liability insurance coverage, and they must be signed. These certificates are documentation necessary to demonstrate that your contractors have insurance coverage for liabilities, including Workers’ Compensation and General Liability. If you do not have proper COIs, your business will be sued to account for mishaps by the subcontractors you hire to work for your business. This can lead to additional expenses and additions in insurance prices. COI collection is simple, and LiteSpeed Insurance assists businesses in attaining compliance within a short period. 

Hence, as much as COIs are part of the risk management strategy, they must offer proper coverage. They only validate the existence of a policy and the coverage given at any particular time.

8 Tips to Make Collecting Certificates of Insurance

Contact LiteSpeed Insurance today to simplify COI management and protect your business from unnecessary risks.

Tip 1: Always Verify Before Paying

Do not think a subcontractor has proper insurance even If you have certificates from insurance companies; get a COI. Ensure that COI is valid and embraces the proper liabilities before paying. If the subcontractor ever states that he has insurance but does not have the certificate, do not assume the subcontractors have insurance. Therefore, you should only pay them once you tender and deliver a valid COI. This will help you avoid extra charges, as in the case of workers comp or liability audits; this will help you get a handle on costs. 

Never trust oral information from contractors; always ask for writing. However, to safeguard your business, it is advisable to contact your insurance provider first and check your coverage. To assure long-term protection, it is also recommended not to let the uninsured contractor start work on your project if you plan to exercise this right. To reduce losses, authenticate the COI before they are allowed into the premises.

Tip 2: Check for Workers’ Compensation and General Liability Coverage

A COI should show participation in Workers Compensation and General liability. The above-discussed coverages help you to shield your business from various risks. Workers’ Compensation means paying for the medical bills and wage loss if an employee is injured at work. General Liability to protect the contractor legally or in the case of property damage or bodily injury claims lawfully and financially. 

Your business can be at a substantial financial risk when either insurance is missing. Ensure the COI contains both kinds of referential insurance to rule out contingent liabilities. Florida Workers’ Compensation law mandates that construction businesses with one or more employees be insured. Violation of the set standards leads to fines being offered, besides stop-work orders being issued. Ensuring that these Workers’ Compensation covers any subcontractors working under the contractor’s supervision is also essential.

Schedule a consultation with LiteSpeed Insurance to review your contractor’s insurance needs.

8 Tips to Make Collecting Certificates of Insurance

Tip 3: Distinguish Between General Liability and Employers’ Liability

It is essential to understand that General Liability and Employers’ Liability are different types of coverages that often need clarification. Most contractors are familiar with General Liability, which protects businesses from third-party lawsuits related to property damage, bodily injury, or personal injury (such as defamation).  As part of workers’ compensation policies, employers’ Liability is a class of employee claims not covered by workers’ Compensation. The above breakdown of coverages should be made clear by the COI. This will help minimize misunderstandings and give comfort that your business is fully protected. 

On the other hand, Employers’ Liability is a part of Workers’ Compensation policies. It provides coverage for situations where an employee sues the employer for workplace injuries or illnesses that are not fully covered by Workers’ Compensation, such as claims of employer negligence. In Florida, Workers’ Compensation is mandatory for most contractors, especially in high-risk industries like construction. When a contractor is working for you and under your supervision, it’s crucial to verify that the COI lists both General Liability and Workers’ Compensation, as this will include Employers’ Liability protection. To ensure that all relevant coverages are clear, both General Liability and Workers’ Compensation (which includes Employers’ Liability) should be included in the Certificate of Insurance (COI). This helps minimize misunderstandings and confirms that your business is fully protected.

For assistance in understanding and verifying contractor insurance requirements, contact LiteSpeed Insurance.

Tip 4: Monitor Coverage Dates Carefully

Remember to ensure one reads the COI coverage dates. The policy should be active when the contractor is with you and when he is not. You must also collect another COI if their policy expires before they finish the work. When you fail to do this, your business can be legally responsible for any mishaps after the cover ends. Use reminder notifications to check periodically the expiration dates of COI and ask for new certifications before they expire. An example of policies is “Additional Insured Endorsement,” which may contain some conditions or dates. One should ensure that the Additional Insured status remains valid for the project’s duration.

Get a free tracking tool from LiteSpeed Insurance to manage COI expiration dates efficiently.

Tip 5: Set Up a System for Expiration Alerts

Therefore, there must be a system to remember when the COI is expiring, as this can be costly to the organization. Setting up alerts at least one week before a specific COI expires is recommended. This will enable you to take time to ask for a new certificate from a subcontractor or their agent. It is recommended that you maintain a record of all the communication concerning the renewal of COI. 

It helps to ensure every renewal and assists in keeping things running smoothly during a compliance audit. It is also essential to capture policy amendments like limitations or removing specific perils that would not be immediately visible from a new COI.

Learn how LiteSpeed Insurance can automate COI tracking and alerts for your business.

Tip 6: Verify the Subcontractor’s Name and Business Information

When the buyer encashes the COI, the subcontractor’s name should be the same as that on the check. Differences can lead to problems during the audit. They encompass various discrepancies, Results, and antithesis. For instance, a subcontractor might furnish a COI issued to an entirely different business organization with a name similar to the intended contractor. This can create problems if the auditor discovers that the certificate has expired or was issued fraudulently. 

Verify the Subcontractor's Name and Business Information

When accepting the COI, one should always double-check the business name so that it ties in with the records. In Florida, it is also recommended to be sure that any DBA names are included on the list, if any. To avoid cases where you are dealing with fraudsters, check the legal name you received against the business registration of the state you are in.

Need help verifying subcontractor information? Contact LiteSpeed Insurance for assistance with COI validation.

Tip 7: Ensure Coverage for Completed Operations

Ensure that the COI includes “Products/Completed Operations” coverage. It has provisions for claims that occur when the contractor completes the job. For instance, if the subcontractor has poorly wired an area that starts a fire after they leave the building, this coverage will respond to the claim. Your business could suffer damages if the coverage is not included in the COI. Always look for this coverage before any contractor enters your property. 

Products/Completed Operations coverage should correspond to the project duration and the warranty period, if any. This helps to put protective measures in place despite the project reaching its completion phase.

Download our free audit checklist to comprehensively verify your contractors’ insurance coverage.

Tip 8: Check Minimum Coverage Limits

More than insurance is needed for contractors; they need to have appropriate limits on their insurance policies. Many insurance providers consider $1,000,000 per occurrence and $2,000,000 overall normal for General Liability. But depending on the size of the project or the risk factor, you may need a limit that is higher as compared to the fundamental limits. For instance, the subcontractor must employ the same cover if the policy limit is $1,000,000. 

If the subcontractor has minimal coverage, you could be billed extra premiums. Ensure that all the COIs provided by your insurance providers comply with or exceed your insurance policy in terms of limits to avoid additional costs. Take note of any requirements or covenants in the specific project that may require more significant coverage limits to be provided. You may want to ask your contractor to provide an umbrella or excess liability policy for substantial or sensitive work.

Schedule a free consultation with LiteSpeed Insurance to assess your subcontractors’ coverage limits and requirements.

Visit our subtracking website and fill the form to get a free subtracking template and the mini course for tutorial.

Conclusion

A certificate of insurance management is vital if your business engages independent contractors. All these eight tips ensure you have the right coverage from your subcontractors. Lack of proper COI data collection and COI verification may cause additional costs, legal concerns, and compliance problems in audits. COI management is a complex process that LiteSpeed Insurance is designed to simplify, thus allowing you to save time and minimize risks. 

Days that your business was vulnerable to corruption cases are over; take control of your COI management now.

Contact LiteSpeed Insurance now for a free consultation and learn how we can help streamline your COI management and protect your business from unnecessary risks.

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