A Certificate of Insurance is formalized documentation showing or proving your insurance. These are usually provided for Liability, but mortgage companies and lien holders will often want the COPI (Certificate of Property Insurance) as well.
Certificates of Insurance do not in themselves convey any rights or privilege’s to insurance policies; they only show specific details about policies. Although, special endorsements in favor of 3rd parties are sometimes noted on COIs, if they have already been added to a policy. Usually, the COI allows for the notification of the Certificate Holder by the Carrier or Broker of cancellation of the policy as stated in the policy contract.
For Example: If a property owner hires a contractor to perform any work on his property. It would be in the property owners’ best interest to get a copy of the contractor’s current COI, confirming all required insurances are in place with the property owner’s information listed in the Certificate Holder section. If that contractor hires a sub-contractor, the sub-contractor should also provide a COI to the contractor – or the contractor can be liable for damage/losses by the at-fault sub. The property owner may request to be added as an additional Insured with a Waiver of Subrogation and a Primary & Non-contributory Clause. This helps insulate the property owner from damages caused by the contractor on the property owners’ property.
Common endorsement listed on COIs are:
- Additional Insured – this gives another party “insured” status for any claims/losses pertaining solely to the work performed by the Named Insured (the person and company obtaining the policy in their name for their business operations). This is NOT a substitute for having your own company covered by your own policy.
- Waiver of Subrogation – This waives the insurance carrier from seeking restitution from a covered claim from a 3rd party.
- Primary & Non-Contributory Clause – this is a clause stating that the insurance referenced is the primary insurance responsible for claims/losses for the Named Insured.
Earlier this year, the CA legislature passed a law further qualifying who may legally be considered an Independent Contractor vs. who must be an employee. Per the CA Legislature, the person is an employee – unless the individual meets the three criteria below:
- The person under their own control… meaning, the company does not stipulate when, how or under what conditions the work in accomplished. For example, if hours are set by the company – this condition is NOT met.
- Is the work performed by the person outside of the usual business of the company? If yes, then this person can be classified as a 1099, if no, this is an employee. For example, if a tree trimming company wants someone to pick up tree debris or other task associated with the services marketed by the company, the individual must be an employee. If a tree trimmer wants a bookkeeper, they can be 1099 as they are not offering the same services as the company.
- The person is does this type of work as their own business. For example, following the scenario above – a bookkeeper would normally have multiple bookkeeper clients and this would be the bookkeeper’s profession or trade. Now, if the bookkeeper was being hired by an accounting venture for bookkeeping, this gets a little cloudy. This is why all 3 of these criteria must be met to pass this litmus test.
For more information… visit here – AB5
Audits are very common in insurance. Many policies require an audit as the premium rate is based on a fluid number such as payroll or sales. The initial quote at the beginning of the policy term is an estimate or best guess for the coming year. Since Workers Comp is a required coverage when a business employs workers, premiums are rated and based on anticipated payroll. As this is a mandatory coverage that few business owners (if any) relish paying, audits are used to verify the correct premium is paid to cover the risk exhibited with the employees working. There are several ways to make the audits less troublesome, give us a call to go over these.
In California, Employer Liability coverage is commonly packaged together with employee protection in a Workers Compensation policy. So, yes – as Workers Compensation is required by law for any employer in California. Employer Liability covers the employer from liability in the event an employee is injured on the job. It is an important part of WC to insulate an employer from liability.
General liability coverage is the broadest liability coverage available, but no it will not cover all liability. Each carrier will add their own exclusions to coverage that differ depending on industry and specific risk. Professional, Cyber, and Product are specific types of additional Liability coverage available to supplement a general liability policy.
Work Comp help during this pandemic!
This pandemic has taken business by storm. Frankly, I am tired of hearing about it and am actively seeking any signs of normalcy. I cannot