Am I Covered by a Certificate of Insurance?
If you ask contractors for a Certificate of Insurance (COI) before they perform work for you, then you are doing what most firms deem adequate contractors’ insurance prequalification. It is important, however, to understand what a COI is. The COI is the subcontractor’s insurance broker’s representation of the insurance that contractor carries, and it does not supersede the insurance policy.
It is generally safe to say that the insurance limits listed on a COI are accurate and can be taken at their word, but the only way to verify anything with certainty is to ask for and review a copy of the contractor’s insurance policy.
Forewarning, this is a developing trend in insurance prequalification and you will likely run into some push back from subcontractors when asking for their insurance policies. We think the best strategy is to explain to the subcontractor that you are not looking to penalize them, nor are you looking for sensitive information (you can allow premiums and other additional insureds, etc. to be blacked out before the policy is sent).
Let the company know you are checking their insurance to make sure that both parties are appropriately protected against potential loss, and let them know you will give them a specific list of any issues you might find with their policy. This is “free” insurance consulting you are providing, and in our experience often gives the subcontractor information they did not know about their policy.
This is by no means a comprehensive list, but below you will find some of the items we suggest looking for when reviewing a subcontractor’s insurance policy:
Check that the contractor’s Workers Compensation policy lists the state you are having them do work in. The remaining comments pertain to Generally Liability insurance.
Is the contractor reporting payroll/revenue for the work you are hiring them to perform? If you are hiring a subcontractor for roofing, but they are only reporting landscaping revenue on their insurance policy then you could have a problem.
Does the policy have broad additional insured language (i.e. everyone they go into contract with is additionally insured)? If it does not, are you specifically listed as an additional insured via an endorsement to the policy document? If the answer is no to both these questions you should address the matter with the subcontractor.
Are there any overly restrictive exclusions? You have to read the policy to see what exclusions apply. For example, if you are hiring a painter to do commercial work in a dense area and you notice the painter has an overspray exclusion, you may want to rethink your strategy. It doesn’t necessarily mean you can’t use the contractor, but it could require more extensive risk management planning than originally thought.
This may sound crazy, but you should also check with the subcontractor’s insurance broker to verify that their insurance premium has been paid and that the insurance company has not cancelled the insurance for any reason. This is a surprisingly frequent issue with subcontractor insurance prequalification.
When you hire TeamCraft Roofing for your commercial insurance project, you can be confident we have the insurance for the job.
