| Construction projects can be simple, short term | | | | status. This can result in policies expiring and not |
| tasks or complex, multi-year endeavors involving | | | | being renewed, changes in limits, or other issues later |
| millions of dollars. In major projects, numerous outside | | | | on. Tracking those insurance certificates is a basic |
| contractors (and subcontractors) are often hired, | | | | Risk Management activity and one that every |
| even if the overall project is awarded to a large | | | | company should do. Without this function, the |
| well-known engineering or construction firm. Unless | | | | company or it's own insurance carrier assumes their |
| the project is insured in a Wrap Up program (all | | | | vendor or contractor's risk (even if they have signed |
| contractors, subs and subs of subs are insured under | | | | contracts transferring the liability). Manually checking |
| one contract for one job), then management cannot | | | | to see that each contractor is insured may be |
| presume that all of their contractors are insured | | | | overwhelming, however, companies which specialize in |
| continuously through the period of the project. | | | | this service can make the process easier. |
| Many Construction Projects Involve Multiple Tiers of | | | | Implement an Effective Certificate Tracking System |
| Subcontractors | | | | Tracking the insurance certificates can be performed |
| In a major project involving multiple aspects such as | | | | by a service or managed internally using software. |
| roadwork, foundations, electrical, plumbing or roofing, | | | | Although outsourcing hands off the daily responsibility, |
| the general contractor awarded the overall contract | | | | the solution means on-going monthly fees and may |
| often hires a variety of local contractors, assigning | | | | limit your control on what requirements you can track |
| them small portions of the job. These subcontractors | | | | and how you interact with your vendors/contractors |
| may even hire a second or third tier of | | | | on issues. Software packages give you: |
| subcontractors to perform specialty work not within | | | | 1) more flexibility, |
| their area of expertise. Subcontractors often work | | | | 2) greater control of your data and |
| on vital aspects of the project. If an injury, death or | | | | 3) are generally less expensive on an ongoing basis. |
| serious industrial accident involving hazardous materials | | | | Regardless of which option you select, the minimum |
| occurs, dealing with the consequences can be | | | | requirements of an effective certificate tracking |
| daunting, even for a well capitalized firm. Recently a | | | | system would include the following features: |
| settlement for $458 million was reached by | | | | * User defined Insurance Requirement Categories- |
| contractors in the Boston 'Big Dig' construction | | | | used to set vendor certificate policy, limit and |
| project due to the death of a motorist from a tunnel | | | | additional terms requirements. |
| ceiling collapse. Insurance claims are the responsibility | | | | * Compliance verified- for no certificate, missing |
| of the contractor and subcontractor. However, if | | | | policies, insufficient limits, missing additional terms, |
| their policy has lapsed or carries insufficient limits, the | | | | soon to expire and expired policy dates. Ability to |
| company could be held liable- often for tens or | | | | override individual policy, limit or additional term |
| hundreds of millions of dollars. | | | | requirements. |
| Despite Contractual Risk Transfers the Company | | | | * Follow-up letters automatically generated- containing |
| May Be Responsible for Uninsured Claims | | | | detailed list of non-compliance issues. Letter template |
| Ultimately, the company is responsible for anyone | | | | can be customized. Reminder letters sent |
| who enters their premises or performs any activities | | | | automatically. |
| on their behalf, leaving them basically three choices | | | | * User defined fields to organize/identify vendors- for |
| on how to handle that risk: | | | | filtering/sorting screens and reports. |
| * Avoid the risk - don't do the activity or let anyone | | | | * Attachments for electronic archival- of actual |
| on their premises (often not an option) | | | | certificates. |
| * Assume the risk or part of the risk - large | | | | * Comprehensive insurance certificate tracking |
| deductibles and Loss Sensitive insurance programs | | | | reports- detailing non-compliance issues by vendor. |
| are examples | | | | * Password access- with multiple levels of user rights. |
| * Transfer the risk - often done by contract and/or | | | | * Audit Trail- created for certificate maintenance |
| insurance. | | | | history. |
| Even if the company has transferred the risk via | | | | Accidents Happen Despite the Best Safety Programs |
| contract to someone else, such as a vendor or a | | | | Unfortunately accidents do happen! One of the ways |
| contractor, they need to be sure the vendor | | | | to protect your company from unnecessary costs is |
| contractor has the financial resources to finance that | | | | to ensure your contractors have valid insurance that |
| risk, which often is by insurance. | | | | meets your requirements. Don't wait until that first |
| Require Proof of Insurance - Certificate of Insurance | | | | multi-million dollar claim to discover your contractor's |
| Form | | | | insurance lapsed and you are now liable for their |
| Most companies require proof of insurance prior to | | | | employee's injuries or negligence. Implement an |
| beginning a project in the form of an Insurance | | | | effective insurance certificate tracking system as |
| Certificate. Unfortunately, many companies stop | | | | part of a comprehensive risk management program. |
| there and fail to monitor the ongoing coverage | | | | |