Why You Should Track Certificates of Insurance & Ensure Compliance
It’s important to collect and track certificates of insurance (COIs) to maintain insured compliance, protect your business against loss, and more. Today the insurance world is fast-paced and complex and professionals can no longer collect COIs and file them in a cabinet or track in a spreadsheet. The complicated contractual language, varying insurance policies, unpredictable changes to coverage, and so much more require that certificate tracking and review be part of every compliance program.
To protect your company against potential underinsured claims, expensive litigation, and failed audits, a proactive approach to managing COIs is necessary.
So why do you need to implement a process to collect and track certificates of insurance from your insureds (i.e. vendors, subcontractors, tenants, suppliers)? Keep reading to see the consequences and examples of not having a streamlined process in place to track COIs and watch for compliance.
Consequences of Not Properly & Efficiently Tracking Certificates of Insurance
- When damage or loss occurs and you’re unable to provide the insured’s COI, it could take weeks for the claims representative and legal counsel to complete the claims adjustment process, costing you thousands in litigation fees.
- If your insurers perform a premium audit and your company doesn’t have proof that your insureds maintain their own insurance, your premium insurance cost goes up. (Not to mention the sudden panic that hits when you realize you don’t have the current COI.)
- Most important, not having a process or system in place can expose you to millions of dollars in damage claims filed every year.
Examples of Failure to Track Certificates of Insurance
- A general contractor (GC) enters a contract with a mechanical subcontractor that requires two years of products completed coverage and provide a COI as required. After the project ends a claim arises against the GC for defective electrical work. During the claims process, it becomes clear that the subcontractor didn’t renew the completed operations coverage, the GC didn’t request a renewal COI, didn’t know it had exposure to loss, and as a result, is responsible for $80,000.
- A property manager enters a contract with a tenant requiring $500,000 of liability coverage. While the tenant is occupying the suite in the strip center, the insurance policy renews. The tenant elects to buy reduced coverage of $100,000, despite the contract’s requirements. The property manager requests and receives the COI but does not see the reduction in coverage. An injury occurs, the coverage deficiency becomes clear, and the property manager is responsible for $200,000 in losses above the limits provided by the tenant.
How to Ensure Your Company is Compliant & Protected
Certificate of insurance tracking solutions, like SmartCompliance, help you manage all aspects of the COI process and minimize the chance of assuming unintended risk.
The easy-to-use, web-based COI automation software makes staying compliant effortless. With the platform, your company can manage COIs in one location, automate collection, end manual data entry, improve accuracy, and reduce the risk of surprise lapses in coverage. Upload, organize and search COIs to guarantee insureds are compliant and ensure coverage for your company.
Interested in learning more about our insurance certificate tracking services, or want to see SmartCompliance in action? Request a free demo today!