Whether you're a roofer, an electrician, a mason or one of the dozens of other jobs that fall under the title of contractor, your work exposes you to some legal and financial risks. The best way to protect yourself against paying out of pocket for unexpected expenses such as legal fees, settlement costs, damage mitigation and more is by having the right contractors insurance in place.
But even though you've got the necessary business insurance, that doesn't mean prospective clients will just take your word for it. They need to know there's adequate insurance protection in place when you're working on their property. Fortunately, there's an easy way to prove that you've got the necessary contractors insurance coverage—simply provide them with a contractors certificate of insurance from your licensed insurance brokers at Morison Insurance.
A certificate of insurance (COI) for a contractor is basically a document issued by your insurance broker that proves you have insurance coverage by listing the essential details of your insurance policy. It's similar to the vehicle insurance card you keep in your truck or car in case you're asked to show proof of auto insurance requirements. A contractors certificate of insurance gives an overview of your relevant insurance coverage that you can show to prospective clients or anyone else who needs to know that you are protected by contractors insurance.
Any business owner or individual who provides contracted labour services needs to be able to provide a certificate of insurance. They provide some major benefits to contractors, including the following.
The primary role of a contractors certificate of insurance is to prove the existence of insurance coverage. This is so important for contractors of all types and descriptions because many clients will simply not work with a contractor who can't provide a certificate of insurance. They need to know that the individuals and companies working on their property have the necessary coverage to cover unexpected costs should something go wrong and someone gets injured or their property is damaged. Most contractors would hate to be turned down for a job and have the work go to their competitor instead because they couldn't adequately prove their insurance status. A contractors certificate of insurance is a simple way to prevent that from happening as long as you actually do have contractors insurance in place.
As a contractor, you may need to hire subcontractors from time to time who should have their own contractors insurance. It's important that you ask a contractor to provide you with a certificate of insurance so you can make sure their coverage meets your insurance requirements. By confirming they have the correct insurance protection, you reduce your liability risk because you can transfer loss to your subcontractor's insurance provider if they are responsible for injury or damage resulting from an insured peril.
Insurance policies can be complex, and it can be challenging to remember precisely which coverage types you have, the limits, and other pertinent information you may need access to on the fly. Suppose you need in-depth information about your policy or have specific questions. In that case, the best course of action is to call your experienced Morison Insurance broker and consult with them directly. But if you just need some quick information to jog your memory, having a certificate of insurance on hand allows you to save time by quickly accessing the information you need about your insurance policy.
When people talk about different types of certificates of insurance for contractors, they are more referring to the type of insurance coverage that is listed on the certificate. In that sense, you may have a liability certificate of insurance or a certificate of auto insurance, and so on. But it's worth noting that a contractors certificate of insurance can list multiple types of business insurance coverage or policies on a single form, including commercial general liability insurance, professional liability insurance, property insurance, auto insurance and more. So in essence, there aren't really different types of certificates of insurance so much as different types of insurance that may be listed on a certificate of insurance.
A contractors certificate of insurance is a printed form that generally doesn't vary much in the type of information it provides. Reading them can be a bit confusing at first if you're not very familiar with how everything is laid out, but once you know what you're looking for, it's pretty simple to find the information you need.
It's common for a potential client to request that a contractor provide a certificate of insurance that lists the client as an "additional insured," but what does that mean? The term additional insured refers to any party other than the primary policyholder who is also covered by the policy. That means the additional insureds listed on the certificate of insurance will have the right to claim against the insurance policy in question because you've extended that coverage to them for the duration of the project.
For example, if you are a framing contractor working on a building site for a new house, it would make sense for the property owner to ask to be included as an additional insured on your commercial general liability policy. If someone visited the job site and was injured when they tripped over a tool you left sitting out, they could choose to bring legal action against both you and the property owner to receive compensation. In that type of scenario, your commercial general liability coverage would apply to both you and the property owner, who is listed as an additional insured. It's important to understand that the additional insured would only be included on your policy for a certain time outlined on the policy, typically as long as you are working on that particular project.
When a contractor needs to get a certificate of insurance, the first step is determining if anything about your current policy needs to be changed. You may need to add additional insureds or remove an exclusion that is preventing you from having the full coverage necessary for a given project. Then, contact your insurance broker at Morison Insurance and ask them to make those changes to your policy. You may also have questions or concerns that you can address with your broker at this time. Next, ask your broker to issue a certificate of insurance that reflects those new changes. Or, if no changes are necessary, simply ask them to provide a new certificate of insurance with a current date of issue. Once you receive the contractors certificate of insurance, file a copy in your own records and provide a copy to the client who has requested proof of insurance to keep with their records.
Suppose you are pulled over by a police officer while driving and asked to show proof of insurance. In that case, you are legally obligated to do so because it's mandatory to have auto insurance for your vehicle. Most professionals, on the other hand, are not required to have business insurance. That means there aren't any situations where you as a contractor are legally obligated to show a certificate of insurance that proves you have commercial insurance coverage—but you may not like the consequences if you can't or won't provide proof of insurance.
For example, a client may refuse to work with you if you don't produce a COI, or a client's condo corporation may refuse to have you work on any part of the condo building—even the part that your client owns—without a COI that shows coverage meeting all their requirements. We've mentioned a few times that potential clients often request certificates of insurance, but there are also other scenarios that may prompt an individual or company to request a certificate of insurance, such as:
Yes, they do. A contractors certificate of insurance is essentially a snapshot of your insurance coverage as it stands on the day the COI was issued. But as we all know, insurance policies don't stay the same forever. Types of insurance, coverage limits, exclusions, endorsements, and more are all subject to change. That's why, even if your insurance policy hasn't changed at all since your last certificate of insurance was issued, clients and others will still want to see an updated version with a recent date of issue, so they have the assurance that the COI you present to them is currently accurate.
If you are a business owner or individual who provides contracted labour services who needs evidence of insurance or you have questions about getting a certificate of insurance, contact your insurance brokers at Morison Insurance at 1-800-463-8074 so they can walk you through the process and make sure your insurance policy is updated for your current insurance needs.
This content is written by our Morison Insurance team. All information posted is merely for educational and informational purposes. It is not intended as a substitute for professional advice. Should you decide to act upon any information in this article, you do so at your own risk. While the information on this website has been verified to the best of our abilities, we cannot guarantee that there are no mistakes or errors.