The business of insurance compliance is tricky. Depending on your industry, you may have anywhere from 10 to thousands of subcontractors and third party vendors performing work for your organization. And, while you want to trust that all of them keep their insurance in tip top shape and have ample coverage, this is, unfortunately, not the norm. Between accidental gaps in coverage and purposeful policy cancellations or reductions in coverage, there is a lot to keep track of for your insurance compliance team to ensure all workers have up-to-date and compliant coverage.
What Might Be Slipping Through The Cracks?
As mentioned above, there are many different considerations when it comes to ensuring your subcontractors and third party vendors have the current coverage. Here are just a few of the most common misses when it comes to inadequate coverage:
- Fraudulent certificates of insurance
- No notice of cancellation
- Behind on premiums
- No renewal of coverage
These and other gaps in coverage can cause major harm to your organization if they aren’t caught and handled appropriately. If your compliance administrator isn’t able to catch the errors, you and your organization could be at risk of major legal repercussions should something go wrong.
The Importance of Monitoring Gaps in Coverage
While keeping track of COIs is obviously a very important aspect of ensuring compliance, it doesn’t guarantee that the right coverage is in place. The unfortunate truth is that the coverage may be reduced, the policy could be canceled the very next day, or premiums may be late. If that’s the case, how would your compliance team be made aware? How can you ensure protection if (and when) that happens?
Things get even more uncertain when you add in the fact that, often, insurance policies are not written to guarantee notices of cancellation to the certificate holder. Even when your contract requires cancellation notice, and you are an additional insured, there is no guarantee of notice to you. The insurance carrier and agency are not legally obligated to tell you; so they aren’t encouraged to spend the resources to notify you. This can be pretty scary, right?
All of these “gray areas” can leave your organization exposed to risk in ways you may not even be aware.
Why Insurance Tracking Services Might Just Save Your Organization
While insurance tracking to ensure proper and active coverage for all subcontractors and vendors may seem like just another task that your team must complete, it is truly one of the most critical pieces of your company’s risk management program. The good news is that, with the right software tools, your team doesn’t have to spend time searching for gaps and checking up on high-risk subcontractors and vendors.
With a quarterly verification program built right into myCOI’s certificate of insurance software, the burden doesn’t have to be on you and your team anymore. With quarterly verification, coverages are reconfirmed every 90 days. 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 in coverage and defend against these compliancy issues.