Why You Should Track Certificates of Insurance & Ensure Compliance
Collecting and tracking certificates of insurance is essential for maintaining insured compliance, protecting your business against loss, and more. In today’s fast paced and complex insurance world, professionals can no longer just collect COIs and merely file them away in a cabinet or track in a spreadsheet. The complicated contractual language, varying insurance policies, unpredictable changes to coverage, etc. require that certificates be carefully tracked and reviewed.
To protect your company against potential underinsured claims, costly litigation and failed audits, a proactive and digital approach to managing certificates of insurance is necessary.
So why do you need to implement a process to collect and track certificates of insurance from your insureds (i.e. vendor, subcontractor, tenant, supplier)? Examine the below consequences and examples of not having a streamlined process in place to track COIs and monitor for compliance.
Consequences of Not Properly & Efficiently Tracking COIs
- When a damage or loss does occur and you’re unable to provide the insured’s COI, it could take weeks for the claims rep and legal counsel to complete the claims adjustment process, ultimately costing you thousands in litigation fees.
- If your insurers perform a premium audit and your company does not 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 do not possess the current COI.)
- Most importantly, not having a process or system in place could potentially expose you to millions of dollars in damage claims filed every year.
Examples of Failure to Collect & Accurately Review Certificates of Insurance
- A general contractor enters into a contract with a mechanical subcontractor that requires two years of products completed coverage and provides a COI as required. After the project is completed a claim is filed against the GC for defective electrical. During the claims process it is discovered that the subcontractor didn’t renew the completed operations coverage, the GC did not request a renewal COI, did not know it was exposed to loss, and as a result was financially responsible for $80,000.
- A property manager enters into a contract with a tenant requiring $500,000 of liability coverage. While the tenant is occupying the suite within the strip center the insurance policy renews. The tenant elects to purchase reduced coverage of $100,000 despite the contract’s requirements. The property manager dutifully requests and receives the COI but fails to accurately review and observe the reduction in coverage. An injury occurs, the coverage deficiency is discovered, and the property manager is responsible for the more than $200,000 in losses in excess of the limits provided by the tenant.
How to Ensure Your Company is Compliant & Protected
Certificate of insurance tracking solutions, like SmartCompliance, are able to help you effectively 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 will be able to manage COIs in one location, automate collection, eliminate manual data entry, improve accuracy and reduce the risk of surprise lapses in coverage. Easily 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!