If your subcontractors are cutting corners on their insurance coverage, that could mean a world of hurt for your business. Sleep better, let myCOI software do the insurance tracking for you.
You know from experience that, when it comes to insurance tracking for your subcontractors, there are many things to watch out for: Ensuring they have the right endorsements, the adequate amount of coverage to comply with organizational requirements, and even the correct wording to ensure that coverage is actually valid.
But what if your subcontractors are cutting corners and pulling one over on you? What if they can’t front the cost of insurance, so instead, they use a fake certificate to “get by” until they can afford it? What happens if they take out a policy with all of the correct limits and coverages and endorsements, share their certificate and documents with your organization’s compliance administrator, and then cancel the coverage the next day (or reduce it significantly)?
While these things may not be common and the motives for each subcontractor cutting corners cannot be assumed, these things can happen more often than you might believe. And unless your organization does thorough insurance tracking on every single subcontractor on a regular basis, risky items such as the above may just be slipping through the cracks without you even knowing about it—unless of course, something happens where the insurance protection is needed.
In this article, we’ll share some of the most common ways subcontractors are cutting corners on their insurance coverage—and what you can do about it.
5 Most Common Ways Subcontractors Are Cutting Corners
Unfortunately, it’s very simple for subcontractors to cut corners on their insurance coverage and, consequently, if your compliance team doesn’t know what to look for, it can be easy for the errors or cut corners to slip through the cracks. Here are some of the most common ways for cutting corners:
- If a project is ongoing, certain items are required to be included in a policy. The subcontractor has to maintain their insurance to remain compliant. What happens if they remove a line of coverage, reduce coverage, or the policy is cancelled or expires?
- If a subcontractor has more than one insurance agent for various types of coverage, there are many certificates and even more paperwork than normal to keep track of. It’s quite possible that one agent handles one portion of coverage and a different one manages yet another—many coverages may seem to overlap, but actually do not.
- Often times when a subcontractor first starts a job, he or she has to increase their limits to comply with the agreement. While they give documentation the first time, they may decrease their coverage over time (even against their contractual obligations) to save money.
- It’s common that 3rd party vendor owners or corporate officers are excluded from a worker’s compensation policy; which could result in an injury and a lawsuit if the owner or executives actually come to the job site.
- Finally, some subcontractors are cuttin corners by searching online to find a fake certificate of insurance template and will then using that to make it appear that they have coverage when, in fact, none exists.
Prevent Gaps in Subcontractor Coverage
Check, double check, and triple check.
While that all sounds great, your compliance admin likely doesn’t have the capacity to triple check his or her work on a regular basis. myCOI is a cloud-based software solution and exists for one reason: to help you handle the everyday tasks of managing certificates of insurance and protecting your company against underinsured claims, costly litigation and failed audits. The software and certificate tracking services are combined into an easy-to-use solution developed and supported by a team of insurance professionals and is built on a foundation of insurance industry logic to automate the COI communication process and ensure you remain protected.
Ready to Learn More About Subcontractors Cutting Corners?
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