You may feel like your insurance broker is being nosy when they ask for your contract in order to issue a certificate— but this is not the case!
Watch Benchmark’s own Rob Cohen and Peter Katkov discuss why your insurance broker might ask for a contract to issue a certificate below.
why do we need to review your contract?
A certificate of insurance (COI) is simply a form of evidence of the liability policies that our client may have. Generally, it consists of:
- General liability
- Auto liability
- Workers’ compensation
We also need to know what the terms and scope of your agreement are in order to provide the best service possible.
As insurance brokers, we have a choice on the additional insured endorsements we allow. Some of these endorsements may incur additional costs. In reviewing your contract, we’re able to better understand what obligation is required of our clients and of the insurance company.
does the certificate convey coverage?
It’s important to note that a certificate doesn’t convey coverage. It is simply evidence that coverage exists in order to enter into the agreement. A certificate is taking an extra step to ensure that both parties are properly informed and covered during an engagement.
why would I need a certificate of insurance?
Generally, a certificate is needed because a third party is involved. The certificate itself is evidence of coverage. It is the supporting documentation that actually transfers the rights of coverage to that third party when our clients are contractually obligated to do so.
For example, if you hired a plumber, you would want to make sure their coverage would cover any damage to your house. Let’s say the worst-case scenario happens— Sweating pipes burn the house down. If you’re additionally insured, their insurance will cover the cost of the damage.
homeowner contractor questions answered
We often get questions from our clients about what limitations there are with homeowners who are hiring contractors. As mentioned above, being a homeowner brings on a new set of challenges.
For example, if a handyman is hired (lucky you, you found a handyman!), most handymen will need general liability insurance.
Another example that has been presented by clients is about employing a housekeeper. If a housekeeper is working at a house then domestic workers’ compensation would have to be added by endorsement. In general, this add-on is inexpensive, around $150 per year. This is a small price to pay to avoid a very expensive bill if injury or harm occurs while on your property.
We answer more frequently asked questions on our FAQ page here.
going the extra mile
If your broker is not performing those tasks for you and looking deeply into the requirements that are being asked of you, then they may not be doing their full job.
Just to be very clear— your broker should be going the extra mile and understanding your contracts in order to provide the best possible service.
If your current insurance broker is not doing that, or you have questions, feel free to reach out to benchmark commercial insurance and talk to one of our trusted brokers.
Curious to know about what happens when you do go through a commercial insurance claim? Read one of our recent blogs, describing the process and how you can protect your business.