Contractors, Certificates of Insurance and Workers Compensation

Wow! What a combination, contractors, certificates of insurance and workers compensation! Check out Workers Compensation Consultants site for detailed information about workers compensation certificates of insurance. Read on for my opinion...

A Certificate of Insurance is merely a piece of almost worthless paper that for some reason seems to make the world of contracting go round. A certificate or "cert" as it's known in the insurance world, is a snapshot in time, a notice to the certificate holder that insurance coverage is in place as shown on the document at that moment in time. It provides information as to who the named insured is, the policy dates, the policy coverage and limits. That's about all it was designed to do.

But wait! There's more! Over the last several years the use of certificates of insurance has changed. Large construction firms, general contractors and project owners who employ or contract "risk management professionals" or a team of attorneys have decided to change this informational piece of paper into a contract. More and more companies are being requested to show on their certificates "special wording" and other items that stretch the limits of the certificate. Most of the time a small contractor is asked to provide almost unattainable wording and conditions on their certificate in order to just do the job.

I've recently reviewed, for a sub-contractor, a certificate request by a large mid-west construction firm who is the general on a federal project. The first thing that happened is the small sub contractor was provided with a "sample certificate" and asked to have their insurance agent provide a certificate exactly as shown. Well here's the problem...certificates of insurance are a standardized COPYRIGHTED form developed and provided for use by an organization called ACORD. Nothing burns me quicker than someone asking someone else to violate federal copyright laws by marking out or changing a copyrighted document. And I'm here to tell you that when an insurance agent, in the guise of trying to help his client meet the onerous requirements set out by the project owner or general contractor, makes ANY changes to that copyrighted document, it IS a copyright violation. That's breaking the law! Shame on you folks who make these requests. The only folks who can make changes to that document are the ones who hold the copyright, ACORD.

Most of the time the biggest change they request is that of modifying the "cancellation notification clause" as shown on the document. And the rub is that the general or project owner wants to make the insurance company responsible for notifying them when the subs policy cancels.

So how about this mister general and mister project owner...don't be such a ______! If you feel you need special wording, make it very clear as to what you need, then ask for an endorsement to the subs policy. Don't try to make a certificate into a contract. Because frankly those agents and subs out there providing modified certificates probably don't really know what they are doing. If you need a policy modification, like a cancellation clause change, ask for a policy endorsement. Oh yea, don't be surprised if the insurance companies thumb their noses at you! Some of the requests I've seen are ridiculous to the point I'd like to see YOU mister general or owner take on the kind of responsibility that you're asking the insurance company to do!

Sorry about the ranting...but this is a topic that many unsuspecting subs and their insurance agents are dealing with on a daily basis.

Thanks!