When you work with another business, vendor, contractor, etc., who isn't properly insured, you open yourself up to new risks. It's important to keep track of your certificate of insurance (COI) in construction.
A simple business insurance policy doesn't always suffice. Insurance is an excellent way to protect yourself from various risks, but you may need additional assurance when working with other businesses or hiring subcontractors.
Despite its importance to global economic development, construction is a high-risk industry due to a number of factors, including injury rates, missed deadlines, and a high number of contractors on each site.
What is a Certificate of Insurance?
All the essential data about an insurance policy can be found in a COI document—in an easily digestible and standardized format. In addition to proof of insurance, proving the status of a policy, and policy limits, the COI facilitates access to its coverage information and protects the policyholder against liability in the event of a claim.
An insurance certificate is usually issued upon the purchase of a certificate of liability insurance. In essence, the COI serves as proof that you are insured, so other businesses you work with are aware that you are protected against risks.
Prior to entering into a business agreement, it helps give you peace of mind. As soon as you request your COI from your broker, he or she should deliver the customized copy that includes the certificate holder as well as any additional insureds you need.
Liability concerns must be mitigated on all projects, regardless of size. In the absence of adequate loss transfer, project owners, managers, and lenders suffer blows to their reputations when they are found responsible for mistakes or accidents.
Keeping track of hundreds of third parties can be especially challenging when working on a large-scale construction project, such as a hotel. These parties include investors, general contractors, subcontractors, and passersby.
What is COI Tracking?
You don't want to have to manually track certificates of insurance. As a matter of fact, it can be quite tedious and frustrating. There is not enough time for project managers to keep track of all these documents, maintain compliance standards, and track expiration dates for COIs without compromising their deadlines.
There are some companies that may skip this process entirely due to the nature of the process.
All of your employees and third-party vendors should be covered by contracts as a business owner and certificate holder.
The contracts you use for your business should be customized to your company instead of copied from the internet. The contracts will also need to be structured by a lawyer.
Why is Tracking a COI in Construction Important?
Organizations' risk management strategies must include tracking COIs. It's easy to miss important information, dates, construction contract terms, and more when there's so much data and documentation—both virtual and physical.
A certificate of insurance tracking system helps protect your business from a wide range of risks within the construction industry, from injuries to overdue projects to substandard work to subcontractor disputes.
In order to ensure that all parties working on a project have the necessary coverage, it is mandatory to obtain a certificate of insurance form from each contractor. Then you can be sure that your work will not unintentionally expose you to risk.
A key part of mitigating liability and preventing lawsuits is ensuring that vendors, contractors, distributors, manufacturers, suppliers, and third parties provide compliant certificates of insurance. Manually or with the aid of software, this can be accomplished.
Construction is a Contractor-Heavy Business
Taking into account that each specialist skill set requires a different subcontractor, construction requires a large number of subcontractors.
There are many unknown factors throughout a project, such as the arrival and departure of subcontractors, the various deliverables, and varying types of coverage insurance levels.
Construction is Inherently Risky
Risks on the job site can take a variety of forms in this industry. There are many risks associated with construction, one of which is injury. In order to prevent personal injury and death at your job site, you must have proper insurance coverage.
Managing such events and identifying who is covered by what insurance can be very difficult without proper insurance coverage or tracking systems in place.
Construction is an Economically Risky Industry
In construction, cash flow is a major issue, and COI tracking can reduce risks associated with liquidity.
To avoid any liens on your business resulting from incomplete work or inability to pay subcontractors, you must be able to quickly check your coverage and coverage limits if a contractor ends the project midway. It is possible to manage this through COI tracking.
Contact a Reliable Insurance Company to Learn More About COI Tracking
It is essential to find a trusted partner or insurance company in every aspect of your business. Providing contractors with comprehensive insurance solutions is Stampede Insurance's goal.
If you have any questions about contractor's insurance and liability insurance coverage, one of our insurance agents can assist you. At Stampede Insurance Services, we can help you with your insurance requirements.
Contact us today at 888-306-7887 at Stampede Insurance Services today!
