October 27, 2016

Do You Know Your High Risk Vendors? How Can You Protect Yourself?

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Certificate of insurance tracking may not be the most glamorous role in your organization, but you can be sure that without taking the proper steps to ensure compliance, your organization may be at huge risk. Needless to say, it’s vital to ensure your process is tight and that you aren’t leaving gaps or turning a blind eye.

Does your team manually track certificates of insurance in order to keep on top of expiration dates and determine when it’s time to reach out to 3rd party vendors or subcontractors when their certificates are up for renewal? Is your organization also regularly checking those same vendors or subcontractors for coverage gaps? If you’re like most organizations, the answer is no, but most aren’t even aware that they could be leaving their organizations open to significant financial and legal risk.

Why Monitoring Coverage Gaps Is Vitally Important

Why is monitoring coverage gaps so critical? Here’s why: While it’s true that all contracts supposedly require a 30-day cancellation notice, the reality is that the insurance carrier and the broker aren’t actually legally obligated to send you the notice. Does this come as a shock to you? Most aren’t aware that this key element of the process rarely happens as it is supposed to.

Keeping track of certificates is vitally important, but this in and of itself doesn’t guarantee that your organization is covered by the policy, either. The dangerous truth is that the policy could be canceled the very next day after the certificate of insurance was issued. Would your organization know if it was? How can you ensure protection if that happens?

Things get even more uncertain when you add in the fact that high-risk 3rd party vendors or subcontractors are most often insured by local agencies that aren’t likely to spend their resources mailing a notice that they aren’t required to send for a customer that is no longer doing business with them. Scary, right?

All of these “gray areas” of uncertainty leave your organization exposed to risk in ways you may not even be aware.

When Vendors Fall Behind on Premiums

Another issue that your organization must monitor and consider is that high-risk vendors can hit hard times and fall behind on their premium payments. When this happens (and it happens more often than many realize), it can leave big gaps in coverage and leave your organization open to significant insurance claims—which is why it’s so important to spot check those who may not be financially stable.

A Better Solution For Managing Certificates of Insurance

While this sounds like an added complication your team really doesn’t have time for, the great news is that with the right software tools, your team doesn’t have to spend time scanning for gaps and checking up on high-risk vendors. After all, they probably have many other organizational responsibilities beyond certificate of insurance tracking alone.

With a policy verification program built right into myCOI’s certificate of insurance software, the burden doesn’t have to be on you and your team anymore. Don’t get blindsided from a high-risk vendor that transfers risk to your organization. Instead, be prepared and ensure you have a system in place to help you monitor gaps and defend against issues.

Certificate of Insurance Tracking Software

It can be a lot of pressure for the person in charge of certificates of insurance to ensure compliance. Shouldn’t you, as an executive, provide them with support they need to make sure the job gets done right? With the right software, your organization can make sure every certificate gets the attention it needs, and you can save your team hours of work while significantly reducing risk to your company in the process.

myCOI is a cloud-based software solution and exists for one reason: to help you handle the task of certificate of insurance management and to protect your company against underinsured claims, costly litigation and failed audits. The software and insurance tracking services are combined into an easy-to-use solution developed and supported by a team of insurance professionals and is built on a foundation of insurance industry logic to automate the certificates of insurance communication process and ensure you remain protected.

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