Staying on the Right Side of the Tracks
Certificate Tracking and Risk Transfer for Commercial Real Estate
Part 4 of 8: What Your Insurance Broker Isn’t Telling You
Imagine your credit or debit card billing statement didn’t track all your transactions. Most people are pretty good at keeping up with their purchase history, but then a business accidentally authorizes your $10.00 purchase for a $1,000 purchase. Thankfully, since all the transactions are tracked automatically, you’re able to call your bank, point out the issue and have them settle the discrepancy. This same type of analogy could be made for certificate tracking.
Remember the days when you used to keep track of all your vendors and/or subcontractors’ certificates of insurance in a seemingly organized binder (or maybe you still do)? I’m sure you’ve wondered if the paper housed in that binder was worth anything in the event of a claim. Well, I hate to burst your bubble, but it doesn’t mean much besides being one piece of evidence of coverage. Certificates only become important if you have the matching contract that’s accurate and compliant.
If a claim arises and you need to transfer risk, the two key components you’ll need are:
- The contract between you and the sub was put in place prior to the work being performed.
- The good ‘
olinsurance requirement section in the contract outlines that you can have someone else’s insurance protect and indemnify your company in the event of a loss.
So, that binder of certificates you’ve been hanging on to all these years is solely a representation of coverages your subcontractors may or may not have. Knowing this, you’re probably now left wondering if all the additional insured forms are accurate. Are you protected for ongoing and completed operations? While the certificate can help serve as evidence of coverage, again, if the contract is not set-up ahead of time, requirements aren’t up-to-date and the certificate is not matching exactly what your contract states, you could be up a creek without a paddle if a claim occurs.
If you haven’t discussed with your broker how they’re protecting you from claims made by subs, or even how they’re tracking all the contracts, requirements and compliance percentages – stop what you’re doing, pick up the phone and ask. You don’t want one wrong ‘transaction’ (or in this case contract) to slip through the cracks.
To learn more about
- Certificate Tracking 101
- Risk Transfer for Property Management Companies
- Risk Transfer Flyer
- 2017 Industry Outlook Video: Real Estate
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