If you are a contractor you most likely have dealt with obtaining certificates of insurance (COI). The standard COI for liability insurance is the ACORD 25. You can visit www.Acord.org for a detailed FAQ on certificates of insurance. In short, the COI is a document that verifies the existence of insurance. It will list the producer (agent or broker), name of the insured, insurance company, types of insurance, policy effective dates, limits of insurance, and certificate holder (persons requesting it), among other things.
If you hire subcontractors or other vendors to work on your jobs and/or alongside you, it is Best Practice to require COIs. If they happen to be uninsured, YOU are at risk for injuries and/or damages they cause. As the manager of Pekin Insurance’s Workers Compensation Claim Department, I have seen many claims involving uninsured subcontractors’ injured employees. In this situation many states’ laws are such that employees can obtain coverage under the general’s policy (i.e. climb the ladder until coverage is found). You can reduce your risk by spending a little time on the front end of a project and obtaining the COI.
In a fast moving world it can be difficult to enforce a COI requirement. I suggest having a written contract with all subcontractors and vendors which contains a provision that they submit a COI prior to starting work. Do not allow them to start working until they submit a COI, and terminate the contract if they do not comply. In the event work is started before they submit a COI, withholding payment until one is submitted can be a last resort.
If you do not understand the information listed on an obtained COI or doubt its authenticity, you should contact the listed producer or insurance company to verify coverage. Also, utilize your own Professional Independent Agent for all COI questions and concerns. They are experts in the field and deal with them every day.
Arron Hampton, CPCU, CWCP
Workers Compensation Manager