Preseason is fast approaching, and a key task that shouldn’t be overlooked for companies who use subcontractors is collecting and verifying their certificates of insurance (COI).
An insurance company issues a COI that certifies a subcontractor has purchased an insurance policy and summarizes the basic policy coverage and limits. Collecting COIs is essential in the event a claim is made against your company.
Keep a paper or electronic file for each subcontractor for key document storage: your contract with the sub, the COI, key contacts for those who will be on site, etc. Make sure these items are all collected prior to the start of every season.
The collection aspect is just the first step. As important is verifying the COI is valid. It is not unheard of for COI forms to be altered or forged. Follow these tips to ensure your subs’ COIs are compliant:
- Examine the form for any sign of tampering or changes. Most insurance agencies utilize a standard Acord 25 form. If this designation is missing, question the authenticity.
- Make sure coverage dates are valid and that coverage won’t expire before their responsibilities have finished for the season.
- Verify coverage and liability limits. Your contracts with the sub should require, at the minimum, general liability insurance and workers’ compensation.
- Confirm that the business or personal name of the company is listed correctly on the certificate. Also require that you be added as an additional insured to the subcontractor’s policy.
Consider requiring your subs to sign an insurance release authorization form as part of their subcontractor agreement giving you permission to contact the insurance company.
These tips are general best practices. For more details and specific requirements, contact your attorney and insurance carrier.
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