Are you sending out accurate Certificates of Insurance?
Posted by Dan Phelan on Mon, Aug 22, 2011 @ 09:45 AM
Certificates of Insurance updates and suggestions. Please take all commentary with a grain of salt depending on the state you perform work in, and because there are exceptions to the majority of what I wrote below...
1. If an upstream party has a 10 million dollar umbrella, and expects all their subs to carry limits equal to or in excess than that, they need to be flexible about changing subcontracts to reflect a realistic limit requirement that smaller subcontractors carry. We've found this to be a fairly easy push back when our subs are being asked to carry limits that are excessively high for the type of work they do, or their scope of work for a particular project. If you don't push back, and have a large claim, there can be severe breach of contract problems because you are out of compliance with what you signed.
2. The standard Acord certificate of insurance has been updated. There are no more endeaver to's, or 10, 30, 60, or 90 day notice of cancellation fields. If you're the upstream party, request the downstream party to attach the endorsement on their policy that states their policy's cancellation clause. Check with your agent/lawyer, and have them update the sample certificate you provide your subs with to comply with the new industry standard version. The insurance industry is still working out some of the kinks, and this gets complicated because different states have different reporting periods. Sometimes they can even be different for each line of coverage, so check with your agent. One big thing to remember, is that the only entity that will be informed of this cancelation is the 1st named insured, usually the cert holder. So if you have a description of ops listing 15 gov't entities, LLCs, holding companies, architects, owners, and whomever else, the only one that is getting a notification of cancelation is the company whose name is in the cert holder field.
3. Additional Insured. If your subcontractors are naming or listing your company as additional insured in the description of ops, do not assume that you are an additional insured without asking for a copy of the AI endorsement on your sub's GL, Auto, and Umbrella policies. And in CT at least, you cannot be added as additional insured on your sub's work comp policy so stop asking!
4. Waiver of Subrogation. Just like with additional insured status, a sub can't just write in the description of ops that a waiver of subrogation applies in favor of additional insureds and it grants you that waiver. Ask to see the endorsement on their policy for proof that their policy actually includes this coverage. Part of this responsibility lies on your agent or broker because they are the primary issuer of you certificates, and if they are writing in coverages that you don't actually have, it could get them in big trouble with their Errors and Omissions carrier, and potentially leave you with an unpaid claim. If your agent is doing this, we'd be happy to be your new agent.
5. One last thing suggestion that applies to both Additional Insured and Waivers of Subrogation. If you don't have it already, get both of these coverage added to your policy in a Blanket form and/or "when required by written contract". There are two reasons for this. 1. You don't have to worry about adding separate endorsements to your policy every time you grant additional insured status to another party you're contracting with. 2. It's cheaper and easier to buy a blanket Waiver of Subrogation, than it is to buy it on a project by project basis. By adding these endorsements in a blanket format, it also eliminates the possibility that you forget to call your insurance carrier or agent to have separate parties added for a specific project which could leave you with either an uninsured claim, a breach of contract, or both.
If you love certificates as much as we do, here's a great resource on best practices and suggestions for compliance.
Sorry for laying all this on you on a Monday morning. Give us a call if we can help clarify, or if you need help getting your certificates and risk transfer system working more efficiently.