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Certificates of Insurance
Mike Marinan
Director of Safety and Risk Management
Public Risk Underwriters
As risk managers or for those who oversee the insurance programs for public entities, you should be aware of the importance and necessity of obtaining certificates of insurance ( COI’s) from various vendors that work on your premises. I wanted to take the opportunity in this article to further stress the importance of this documentation.
There are numerous examples of why you need COI’s. Here are just three examples out of many.
One of PGIT’s clients contracted for the exterior painting of one of their buildings. The over spray from the paint gun inadvertently painted a new Mercedes Benz convertible. A COI was provided but coverage had expired. The entity now owns a new Mercedes.
A member school district contracted for interior renovations in one of their buildings. The contractor had been cutting steel and finished for the day. Embers from the cut steel ignited combustible material in the room resulting in a $3,000,000 claim. Unfortunately, the COI submitted by the contractor only had liability limits for property damage of $300,000.
A public entity obtained the services of a general contractor for some minor repair. The contractor did not purchase workers’ compensation coverage and did not obtain a Certificate of Exemption from Workers’ Compensation Law. He fell from the roof and the entity was liable for the claim.
The purpose of certificates is fairly straightforward. When a public entity contracts with a vendor for material, equipment, supplies, or services, that vendor’s activities and the goods provided create an inherent liability risk to the entity. The COI provides proof of insurance from which your entity can seek protection from loss or exposure to loss resulting from any negligence on the
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part of a vendor who furnishes services to the entity. By adding your entity to the policy as an “Additional Insured”, you transfer the risk associated with the vendor from your agency to the insurer. The endorsement to the policy will trigger coverage for you and requests the policy issuer to inform you of any changes or cancellations to coverage
At a minimum, the COI needs to show the following: |
A |
Name and address of contractor’s or vendor’s insurance agent |
B |
Name of insurance company affording coverage |
C |
Policy number |
D |
Inception dates and expiration dates of coverage |
E |
Coverage’s afforded (usually General Liability, Automobile Liability, and Workers’ Compensation, depending on the work being provided and the exposure to loss) |
F |
Limits of coverage and any restrictions or deductibles that apply |
G |
Description of operations |
H |
The certificate holder’s name |
I |
Requirement of at lease a 30 day notice to certificate holder of any changes or cancellation of coverage; |
J |
The authorized representative’s signature, (please note that the COI is NOT valid unless a signature of authorized representative is shown). |
The Safety and Risk Management Department will work with you and your staff to develop guidelines for liability limits for various contracted and vendor operations. If you have already adopted set standards and would like to share them with other public entities, please contact me at mmarinan@publicrisk.com.
Printable Copy |
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