Larue Insurance Agency, Inc

Archive for the ‘Contractor Information’ Category

If you are a contractor that finds it necessary to hire sub-contractors then you know certificates of insurance and the mangement of them are a very real fact of  life. Your failure to collect and maintain certificates of insurance can cause your insurance to cost much more through your annual premium audits and may cause your insurance company to have to pay claims because the insurance of the sub-contractor was not in place as you thought. When this occurs you may find that your insurance carrier will want to raise your rates or cancel your insurance.

We have been specializing in contractor insurance for several years and have come to learn that contractors come with all types of attitudes. Some are well financed and understand that a good strong insurance program is just as important as any other tool in the tool box.  Others are poorly financed and resent having to purchase insurance and seem to have a hard time keeping the premiums paid, and the insurance in force. This group has to be forced to maintain insurance by constant scrutiny of the general contractor who is hiring them.

A certificate of insurance basically says there was insurance in force on the day it was issued and that is about all you can get from it. Many contractors utilize monthly payment plans for their insurance which means they will have several times a year in which the insurance is in jeopardy of  lapsing.

We catch at least one contractor a year who takes a certificate of insurance that was issued ligitimately at one time, and continues to alter it and pass it off even though the insurance it refers to is no longer in force.  We call this a Bogus Certificate of Insurance.  The certificate of insurance confers no policy rights and if the policy to which it refers is not in force, then the certificate is a worthless piece of paper.

Bogus certificates are usually easy to spot if you just pay a little attention. Most insurance agencies today utilize computer systems and laser printers to prepare their documents.  The certificates are generated by these systems and all of the lines will be very straight and uniform. The whole form might be slightly crooked on the page only because the paper was fed askew but the lines within the form itself will be very straight.  A certificate will use different size fonts and boxed but all of the print will be straight and crisp.  If you see any entry that is not straight with the form or appears to be smudged you may have a candidate for a bogus certificate. This will alway be in the area of the dates and limits of the coverage in question.  The certificate holder are is also an area that gets altered.

If you received the certificate by FAX did it come from the Agent’s FAX machine.  If  it came from Kinkos or some other place this should raise your suspicion. Since each certificate needs your name and address in the certificate holder area, it has to be custom done and should be coming from the Agency.

There is a good chance that you do not need to see the certificate to sense that the sub-contractor might be lapsing his insurance.  A certificate of insurance always shows the name and contact information for the Agency who issued it.  If you have any doubt, contact the agency and confirm that the certificate is legitimate and coverage is in place.

A little extra effort can save you big time and brings its own rewards.