We often get asked if a certificate of insurance is actually necessary. The short answer is, yes! Especially if your business uses outside contractors or vendors for pretty much anything. This would include snow removal, remodeling, events, or anything else that would involve someone coming and performing work on your premises.
What is it?
A certificate of insurance is a document created by a business insurance agent or company and proves that a contractor, vendor, etc. has insurance. The document will give the date that the policy expires, as well as the type of insurance the business has. It will also show the amount of coverage available.
Why Do I need it?
These certificates prove that the vendor has insurance, which will cover any issues they may cause. Your company may be held liable if the vendor didn’t have insurance. Even if they tell you they have insurance, but you don’t have the certificate, you could still be responsible. This certificate is proof of exactly what coverage they have and what their policy is currently. You are unprotected if you don't have a certificate from the company doing work.
What should be in it?
When you are given a certificate of insurance there are a few things to check for.
- -Check that the named insured is the same as the company that is performing work for you.
- -Check the dates. If the policy is expired or you will be using their services past the expiration date, then you should request a new certificate.
- -Make sure that their policy at least includes general liability and worker’s compensation. You should talk to your insurance agent to see what coverage is needed.
- -Ask the vendor to add your organization as a named additional insured. Just because they give you a certificate of insurance doesn’t mean that you will be instantly covered.
What happens if a vendor doesn’t have one?
If your company has worked with a vendor or a business in the past, it can seem easy to skip a certificate of insurance because you trust them. But this can cause huge issues if there is an accident. If they were hurt or caused major damages, then you could be held liable for all the involved costs.
As an example, you have a company working on replacing your roof and a bundle of shingles falls on someone and severely injures them. Now it may seem obvious that this would be the roofers' responsibility right? Wrong, if you don't have a certificate of insurance. then it could be your responsibility.
To prevent issues like these, always require a certificate of insurance.