Insurance Certificates:
The Key to Effective Risk Management

If your business hires contractors and other vendors, it may be important for you to confirm that these vendors have appropriate insurance coverage. In the event of a problem stemming from the work of a hired subcontractor, you may be held liable if that vendor does not have proper coverage. One key element in an effective risk management program is to maintain an accurate and complete record of all insurance certificates, which are documents that detail both the amounts and types of insurance held by an individual or a business. Here are a few hints to help you get organized:

  • Establish a risk management department or group to manage incoming contracts, agreements, and insurance certificates. Employees working in this department should be responsible for receiving and reviewing insurance certificates.

  • Keep photocopies of all insurance certificates and file the original certificates with the appropriate contracts, purchase orders, and agreements.

  • Create a filing system to track and monitor insurance certificates, and establish procedures to promote efficiency when receiving and reviewing updated insurance information. It is often recommended that businesses establish a schedule of certificate follow-ups, based on the nature of the work and the relationship with the business from which a certificate is requested. For instance, if a company establishes a six-month working relationship with a contractor, it may be advisable to obtain a certificate prior to commencement of the work and again at three months. In many cases, especially where the risk of loss is small, an annual check will suffice.

These simple steps toward organizing insurance certificates may help you control your business risks and avoid any liability associated with other vendors with whom you work. As your business grows and expands with new partners, it is important to review your insurance coverage periodically to determine the coverage that is right for you. For assistance in managing your insurance certificate management program, contact one of our qualified insurance professionals.


Copyright © 2017 Liberty Publishing, Inc. All Rights Reserved.