If your organization has faced a lawsuit due to an insurance issue, then you have felt the burden both financially and in every other way. A lawsuit or claim can take its toll in many different ways: taking up an incredible amount of time and resources; unsettled employees and executives; new processes meant to protect the business; audits to uncover potential hazards going forward, and so on.Going through a lawsuit—such as one caused by a compliance issue slipping through the cracks—can suck the life out of an organization and its team faster than anything else, and it can also be paralyzing to your compliance staff that does the work of ensuring each contractor and third party vendor is properly insured.
How Can Compliance Items Slip Through The Cracks?
Unfortunately for organizations that work with contractors and third party vendors, it’s easy to overlook important certificate of insurance and endorsement requirements. Why? There are so many aspects to consider, and even an unchecked box or an out-of-place word can be enough to cause major troubles. What are some of the common items that can slip through the cracks? Here is a list of gotchas that your compliance team should always double-check:
- Do your contracts require coverage for completed operations?
- Claims can come up after the work is completed. Did you know that many additional insured endorsements out there do not cover this type of claim? If you are wanting to be protected after the work is done, you will need to read through the endorsements to ensure that it is covering “compeleted operations.”
- Do your contractors have more than one insurance agent?
- If a contractor or third party vendor has more than one insurance agent for various types of coverage, there are many certificates and even more paperwork than normal to keep track of. It’s quite possible that one agent handles one portion of coverage and a different one manages yet another—many coverages may seem to overlap, but actually do not.
- Do your contractors maintain increased limits?
- Often times when a contractor first starts a job, he or she has to increase their limits to comply with the agreement. While they give documentation the first time, they may decrease their coverage over time (even against their contractual obligations) to save money.
- Are corporate offices or owners excluded from worker’s comp?
- It’s common that third party vendor owners or corporate officers are excluded from a worker’s compensation policy. This could result in an injury and a lawsuit if the owner or executives actually come to the property where the work is being done.
It doesn’t take much imagination to realize the potential for disaster if any of the items above slips through the cracks. And when that happens, it can cost a significant amount of money, not to mention the emotional baggage and significant tolls it can take on the organization.
Needless to say, the potential for risk creates a significant amount of pressure for the person in charge ensuring compliance for each and every contractor and third party vendor. Shouldn’t you provide them with support they need to make sure the job gets done right so nothing in the process slips through the cracks? With the right software, you can not only make sure every certificate gets the attention it needs, you can save your team hours of work while significantly reducing risk to your company in the process.
Insurance Tracking Services Can Prevent Oversight
Insurance tracking services like myCOI help your organization handle the task of certificate of insurance management and to protect your company against underinsured claims, costly litigation and failed audits. The cloud-based 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.