When accounting for risks related to contracted work, securing your own insurance is not always enough. It’s critical that your partners are covered as well. This is particularly important when you consider that, following an incident involving a contractor or vendor, your business could be the one held liable for any damages that occur.
To protect against this sort of risk, many organizations turn to certificates of insurance (COIs). COIs are used across a variety of commercial business relationships and essentially serve as proof that a particular party has an insurance policy in effect.
While you may require your partners and vendors to carry insurance in your contracts, coverage needs can change quickly, making it necessary to regularly review the policies. In addition, contractors and vendors may not be honest about what insurance they have in place, making you wrongfully assume you are protected.
Uninsured or inadequately insured contractors can increase your premium substantially. In order to protect your business, always obtain a COI at the time of hire for an independent contractor performing work for your business during the policy period. During your annual premium audit, auditors will ask to review this certificate. If you do not have these certificates or if your independent contractors do not carry workers’ compensation insurance, you may be charged an additional premium for assuming the risk of the claim.
Automating the verification process can save you time, money, and the headache of having to deal with litigation from an unexpected claim.
To learn more about COIs, contact us at Neckerman Insurance Services today.