A Free Business Tool-Acord Certificates of Insurance
Posted by Chester Butler, CIC, CPIA on Tue, Jan 31, 2012 @ 05:00 AM
In my last blog, I described three outside parties that may put your business at risk. They are your vendors, your subcontractors and outside contractors. What can you do to determine if your business is at risk from uninsured contractors? How do you know if a vendor is underinsured? Your best tactic is to ask for an Acord Certificate of Insurance.
Acord Certificates of Insurance (COI)
The COI provides you with information about the insurance of a vendor, subcontractor or contractor. If they cannot provide you with a COI that tells you they are uninsured. There is really no excuse not to provide a COI. Most agents prepare them at no charge for their clients. Run from uninsured contractors, subcontractors and vendors. You are asking for trouble if you do business with them!
The COI will show you what insurance is in force on the day it is prepared. But it provides much more information. For example, it will confirm that Commercial General Liability, Commercial Automobile Liability and Workers Compensation insurance policies are in place. It will reveal what limits of insurance are available for each line of insurance. And it will indicate when these policies are due to expire. The Acord Certificates of Insurance are the insurance industry standard.
Acord Certificates of Insurance (COI) Can Help You Evaluate Risk
If two of your vendors are equal in all aspects, do you want to do business with the one that carries $300,000 in liability protection or the one that carries $2,000,000 in liability protection? Their insurance limits tell you something about their business style, don’t they? In addition, their liability limits and the lines of insurance they carry may become very important. If their product damages your property or a guest at your business, high limits are better than low limits. Without a COI, you are flying blind!
Acord Certificates of Insurance (COI) Can Help You Minimize or Eliminate Risk
Suppose your attorney advises you to require all your subcontractors and contractors to name your business as an Additional Insured. Becoming an Additional Insured means your business has direct access to the other party’s insurance. In other words, if a liability claim arises out of the subcontractors work; their insurance protects your business. Additional Insured status translates into free insurance! How do you verify that your business does have Additional Insured status on their policy? Ask for an Acord Certificate of Insurance to verify the Additional Insured status. It is easy, simple and free.
Acord Certificates of Insurance (COI) Can Save You Money on Your Insurance
Uninsured contractors, subcontractors and in some cases vendors can cost you a bundle. Your business insurance policies make you responsible for premiums associated with using uninsured contractors and subcontractors. It’s a simple equation. If you cannot provide confirmation the contractor or subcontractor has insurance, you get to pay for that exposure. Use COI’s to confirm insurance and save your business these penalty premiums.
In summary:
- Do not do business with the uninsured. This includes uninsured contractors, subcontractors or vendors.
- How do you get an Acord Certificate of Insurance? You ask your vendors, subcontractors and contractors to provide them.
- Use COI’s to confirm insurance, to help you minimize or eliminate risk and to save money on your business insurance.
As a service to our clients we are happy to review the Certificates of Insurance you collect for irregularities that could harm you business. Just drop us an email or give us a call at 615-777-1165 and we’ll set up an appointment.
Be sure to consult your attorney about all contractual matters since your contractual arrangements and other considerations may determine what insurance you and others with whom you do business should carry.