10 Tips for Managing Certificates of Insurance

Certificates of insurance (COI) play a critical role in helping contractors optimize risk management, especially when working with subcontractors. If these documents are not properly obtained, reviewed and updated, your business could be exposed to liabilities that often lead to preventable losses.

When hiring subcontractors and collecting or managing certificates, confirming the following can help ensure your business is adequately covered:

1. Certificates on file cover the duration of the project.

2. Adequate coverage and limits are shown. Subcontractors should be counted as subcontractors at audit, not as employees in a higher-rated class.

3. The subcontractor’s liability limits are equal to or higher than your own. If a claim exceeds the subcontractor’s limits, your policy may end up contributing.

4. Coverage is listed for the entire time it is contractually required. Many contracts require that subcontractors maintain required coverage for a specific period following project completion. Be sure to keep records of certificates for at least two years after the job is completed.

5. Agreements include additional insured endorsements. Accidents can happen during or after construction. Double-check your agreements to ensure additional insured endorsements are secured to cover both ongoing and completed projects.

6. The subcontractor’s insurance policy and endorsements include language that confirms their policy will be the first to respond and pay for a claim involving both parties. This primary and noncontributory language will ensure your policy does not contribute to a loss payment until the subcontractor’s limits are exhausted.

7. The subcontractor provides a waiver of subrogation on each policy. This will prevent their insurance company from seeking reimbursement from you or your insurance policy for any loss payments they make.

8. The subcontractor’s general liability policy provides “per project” and “per location” aggregate limits. These classes change the application of the general liability aggregate limit from a policy aggregate to a project or location aggregate, ensuring each project or location you work on during the policy period has a separate aggregate limit.

9. The subcontractor carries worker’s compensation insurance. If a subcontractor has not secured this coverage, you could be liable for any injury suffered by the subcontractor or their employees while they’re working on your project.

10. The subcontractor’s policy is endorsed to give you 30-day notice of cancellation. Most parties will provide this but reserve the right to give a 10-day notice for cancellation due to nonpayment of premium. If you receive a notice of cancellation, either ensure the notice is rescinded or stop the subcontractor from working on your jobsite until coverage is obtained.