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How to ensure a contractor has insurance? (1 Viewer)

Steeler

Steeler

Footballguy
Should I ask for proof of insurance?  Or should I ask for the name of their insurer?  What's the typical way to go about getting this information without pissing off the contractor?  If they can't or won't provide the info I'll just use someone else, but I would still like to go about it the right way.

 
Steeler said:
Should I ask for proof of insurance?  Or should I ask for the name of their insurer?  What's the typical way to go about getting this information without pissing off the contractor?  If they can't or won't provide the info I'll just use someone else, but I would still like to go about it the right way.
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projects I work on all demand that ALL contractors provide COIs (Certificate of Insurance). I'd think it would be normal, even outside of NYC luxury buildings.

 
Yeah, ask for a COI for sure. Unfortunately, that won't stop them from buying insurance and then immediately cancelling it.

Also, since the COI gets filled out by their broker rather than the insurance company, you do run the risk of it not being 100 percent accurate.

So yeah, contractors suck

 
No idea about your state, but Florida has a state database that you can search for proof of workers' compensation insurance.  When policies cancel mid-term that COI won't let you know, but the state database is updated daily.  Proof of Coverage

 
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greedygoat said:
No idea about your state, but Florida has a state database that you can search for proof of workers' compensation insurance.  When policies cancel mid-term that COI won't let you know, but the state database is updated daily.  Proof of Coverage
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Awesome!  I live in Florida so I'll check out that database.

And thanks for the proper terminology - COI - Certificate of Insurance.

 
One other thing that can be of help:

If you have the opportunity, pay for the materials yourself. Contractors will usually mark everything they buy up, so you can save some dollars there. And, if they have accounts all over town and fail to pay their bills, you could have a lumber yard trying to file a lien on your house depending on how much dough they are owed.

 
Steeler said:
Awesome!  I live in Florida so I'll check out that database.

And thanks for the proper terminology - COI - Certificate of Insurance.
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Bad news for me (and the contractor I was going to use) is that they are listed as "EXEM" and after drilling down a bit I see they have "no history of coverage"... sorry guys!

 
Steeler said:
Bad news for me (and the contractor I was going to use) is that they are listed as "EXEM" and after drilling down a bit I see they have "no history of coverage"... sorry guys!
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Steeler greedygoat was referring to Workers Comp insurance which you don’t need to worry about. EXEM most likely means he has no employees and so is exempt from carrying it.

What you need is a COI from his LIABILITY insurance that includes completed operations coverage. This is what protects you in case he effs up the job. Again, contractors are required to provide these all of the time so you are well within reason to ask for one from the contractor.

 
facook said:
Steeler greedygoat was referring to Workers Comp insurance which you don’t need to worry about. EXEM most likely means he has no employees and so is exempt from carrying it.

What you need is a COI from his LIABILITY insurance that includes completed operations coverage. This is what protects you in case he effs up the job. Again, contractors are required to provide these all of the time so you are well within reason to ask for one from the contractor.
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Thanks man.  However, the guy does have employees (or maybe he treats them as subcontractors to get around having workers comp insurance for them).  Either way, I thought workers comp insurance was necessary to cover me in case someone gets hurt while working on my house.  It's a relatively small job, part of which is re-screening my pool enclosure, so I'm not that worried about the job being completely hosed - I'm more concerned about someone falling off my pool cage which is ~20 ft high at the apex.

 
Steeler said:
Thanks man.  However, the guy does have employees (or maybe he treats them as subcontractors to get around having workers comp insurance for them).  Either way, I thought workers comp insurance was necessary to cover me in case someone gets hurt while working on my house.  It's a relatively small job, part of which is re-screening my pool enclosure, so I'm not that worried about the job being completely hosed - I'm more concerned about someone falling off my pool cage which is ~20 ft high at the apex.
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Ah gotcha.  Then yes you'd want WC in place for whoever you hire assuming they are using employees.  Sorry for the confusion.

 
ChiefD said:
One other thing that can be of help:

If you have the opportunity, pay for the materials yourself. Contractors will usually mark everything they buy up, so you can save some dollars there. And, if they have accounts all over town and fail to pay their bills, you could have a lumber yard trying to file a lien on your house depending on how much dough they are owed.
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Not necessarily. A lot of contractors buy so much they get good discounts so even with the markup, they save you money.

 
TLEF316 said:
Yeah, ask for a COI for sure. Unfortunately, that won't stop them from buying insurance and then immediately cancelling it.

Also, since the COI gets filled out by their broker rather than the insurance company, you do run the risk of it not being 100 percent accurate.

So yeah, contractors suck
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Professional services contracts will typically require notice of cancellation, although that just leaves you with a breach of contract claim against an uninsured company. One other concern is that the COI doesn’t usually list retentions. The COI might show high limits, but hide the fact that you’re  dealing with a company that is essentially self-insured. In the end, it’s really more about doing business with people you trust. 

 
ChiefD said:
One other thing that can be of help:

If you have the opportunity, pay for the materials yourself. Contractors will usually mark everything they buy up, so you can save some dollars there. And, if they have accounts all over town and fail to pay their bills, you could have a lumber yard trying to file a lien on your house depending on how much dough they are owed.
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How in the world could that lien be possible?

 
TLEF316 said:
Yeah, ask for a COI for sure. Unfortunately, that won't stop them from buying insurance and then immediately cancelling it.

Also, since the COI gets filled out by their broker rather than the insurance company, you do run the risk of it not being 100 percent accurate.

So yeah, contractors suck
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We do our own certificates because we don't necessarily trust the brokers. I've always assumed that we were an outlier in that regard. Looks like it.

 
bentley said:
We do our own certificates because we don't necessarily trust the brokers. I've always assumed that we were an outlier in that regard. Looks like it.
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I would imagine so.

I'm a commercial insurance underwriter. Started my career in the small business unit where we wrote a fair amount of contracting business (mostly small artisan contractors rather than actual builders or GC's). Back then, I felt like I spent half my day NOT telling brokers what to put on their COI's. I'd get calls all the time...."Can we put X  on our certificate insurance?"   "The client is looking for a COI that says......" "Is ______ covered"

And my response was always the same. A) I can't comment on hypothetical claims scenarios (basically the first thing you learn when you become an underwriter)    B) You can put whatever you want on a cert because at the end of the day, they're not really even worth the paper they're printed on.   Coverage determinations always go back to the policy. A broker can put Moon travel liability limits on a COI if they want to. Doesn't mean a thing unless an underwriter is stupid enough to agree to it in writing. 

If you're really trying to cover all your bases, ask for a copy of the GL Dec page (or WC if you're concerned about that)  at the very least. Make sure it shows the policy term, limits, any deductibles and a full list of forms on the policy. (to make sure the policy doesn't include any exclusions that will prevent it from responding to a claim you might file. I'd also ask for 30 Day Notice of Cancellation, but the reality is that most insurers are going to balk at providing this for an individual person (They're not going to want to go through the headache of mailing out NOC to every individual person that a small contractor did a job for). However, I haven't done small commercial in a while, so maybe that's just the nature of doing business at that level.

Disclosure: I'm an underwriter, not a licensed broker, so please don't take my advice as gospel when it comes to protecting yourself personally. This is just the stuff I'd ask for based on my 11 years experience on the other side of things

 
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