Construction, Insurance, and Certificates Oh My!
By: Mary Thompson, Capstone Brokerage President, October 26, 2015
A big part of the construction industry is insurance. Why? Well, it is simple – construction is a risky business. All construction projects have a defined set of risks; bad weather, non-payment, safety concerns, construction defect, property damage, the list goes on and on. As a contractor and a consumer it is important to be sure all parties working on your home, or jobsite, have proper insurance coverage in all areas of risk.
Construction insurance can make the difference in a company making a profit or losing money on a jobsite. It is important to have adequate and quality coverage in place for all parties involved in both new construction and remodeling project. A few types of policies we recommend to our construction industry clients are:
General Liability Coverage
Builder’s Risk Insurance
Professional Liability Coverage
Commercial Automobile Coverage
One way to be sure proper coverage is in place is for contractors to require a Certificate of Insurance from everyone working on a jobsite, or for homeowners to require it for anyone working on your property.
What is a Certificate of Insurance?
A Certificate of Insurance is a simple piece of paper that basically summarizes benefits of the insured party. It is a basic proof of insurance often required by contractors.
What is listed on a Certificate of Insurance?
Typically, the certificate will have the insured’s party name, the insurance companies name, policy numbers, insurance limits, effective & expiration dates, policy types in place, and specifics about coverage. Lastly, most certificates indicate that certificate holders will be notified if insurance is canceled.
What is a Certificate Holder?
Typically, a certificate holder is a person or business who is named and insured by the policy. There is something also called an Additional Insured which many construction companies and contractors often require. Additional Insured refers to anyone covered by the insurance policy in addition to the policy holder. A Certificate of Insurance will include a list of additional insured(s) as well. If a party is listed as an additional insured they can also receive coverage benefits, if they do work on the policy holders behalf, if injury or property claims are as a result of that work.
Who would request a certificate of insurance and why?
If you are a contractor and you hire subcontractors it is VERY important that you require a Certificate of Insurance from ALL subcontractors. A Certificate of Insurance provided to a contractor from a subcontractor essentially protects the contractor from the risk associated with subcontractors work.
EXAMPLE: A general contractor for a housing project hires a roofing company to complete the roof work. In the event that a roofer gets injured on the job, the contractor is not held responsible for that injury under their Workers Compensation policy rather the subcontractors policy would be. This is why it is SO important to require a Certificate of Insurance from all subcontractors working on a jobsite.
Property Damage is another risk that can be protected by requiring a Certificate of Insurance from subcontractors.
What about if I am a homeowner should I require a Certificate of Insurance?
You should also request a Certificate of Insurance from anyone doing work on your home. Hiring a licensed, bonded, and insured contractor is crucial to homeowner’s protection.
Certificates of Insurance are important and required in many industries, specifically construction. There are other industries that may also require Certificate of Insurance such as the entertainment industry and even those hosting special events. A Certificate of Insurance can be provided by and insurance broker or insurance company, they are usually easy to obtain.
