Certificate of Workers Comp Insurance for Prime and Sub Contractors

Just as a contractor purchases insurance to protect itself, a contractor must insist that the parties down the contractual chain maintain appropriate insurance coverage. This protects the contractor with regard to potential liability to the project owner, as well as, possible responsibility for injuries to employees of subcontractors.

The only way to assure that coverage is in place is to obtain a certificate of insurance. In a recent case, a prime contractor received a certificate of workers’ compensation insurance from a subcontractor. The certificate form was incomplete. There was a job site injury to an employee of the subcontractor. The sub had no comp coverage. The prime contractor argued that its reliance on the

certificate relieved it of responsibility for the injured worker. But is reliance on an incomplete form reasonable?  Obtaining, reviewing and updating certificates of insurance can be a tedious administrative task. But it is very important.  Featured in next week's Construction Claims Advisor -- detailed case summaries on this topic and other issues:

• Contractor Burned by Sub’s Incomplete Insurance Form

• Sub’s Claim Period Started to Run with Final Payment to Contractor

• Unauthorized Equipment Use Did Not Extend Lien Filing Period

I would like to know which administrators in your organization perform this function and what procedures are in place to assure effective review of certificates -- all comments are welcome below.

Bruce Jervis, Editor
Construction Claims Advisor

Comments

[John Derucki]

Been there before!!

Go to the State Workmen's Comp. web page and get verification that the policy is in place. If the policy numbers or other information is not accurate, then get the subcontractors agent to work with the state to get the information up to date. DO NOT LET THEM ON SITE UNTIL EVERYTHING MATCHES!!!

[Mike Smith]

Thank you for the information.

[Bruce Jervis, Editor, Construction Claims Advisor]

The suggestion that contractors turn to the state workers' comp web site is a good one. The quality of the sites varies, however, from state to state. I also agree that confirmation from a subcontractor's insurance agent is a prudent practice