Contractors Insurance Logo

Certificates of Insurance - Workers Compensation PDF Print E-mail
Articles - Contractors Insurance
Article Index
Certificates of Insurance
A.M. Best’s Ratings
Financial Performance Ratings (FPR)
General Liability
Occurrence vs. Claim Made
Workers Compensation
All Pages

Workers Compensation

  • The proprietor/partners/executive officers are included or excluded.
Lets stop and think about this for a minute

If you receive a certificate from a contractor and the owner or partner are on the jobsite. The owners most likely do not have work comp on themselves. Why? Because they are not required to have it. They may have work comp but only for employees. This is an area that is misunderstood by most contractors, and to make matters worse, most contractors insurance agencies do not mark the box at all.


There is none! That’s right, sole proprietors and partners cant buy it most corporate owners just plain don’t buy comp themselves. That means if the owners are injured on the job, they make a claim for work comp benefits under your policy. Will they win? Not every time but they can unless you take the proper precaution. The trick is to make sure they are "independent contractors" under the definition of the law. If you do not already have a copy of my report on "who is an independent contractor" then call. The process is.

Hint, one of the best solutions is in the documentation you have with the contractor, make sure that you have a signed written contract with the subcontractor that clearly states that he is a independent contractor and not a employee. Most of the industry standard contracts have such wording but they are useless if you do not insist on having one in the file with every sub.
  • Policy number-Auto Liability policy number must be completed.
  • Effective Date-Date must be completed.
  • Expiration Date-Date must be completed.
  • Limits-All limits must be completed.
Description - This box is used to explain things such as:
  • Name and address of project.
  • Naming the additional insured. (this is discussed later on)
  • Cancellation wording for non-payment or reporting on work comp payroll.
Certificate Holder - this is the person that the certificate is issued to. A full name and address in mandatory!!!

Cancellation - Should any of the above described policies be cancelled before the expiration date thereof, the issuing company will endeavor to mail ____ days written notice to the certificate holder named to the left, but failure to mail such notice shall impose no obligation or liability of any kind upon the company, its agents and representatives.

Will endeavor to is the problem here…

Will endeavor to simple means the insurance company will try to let you know if the policy has been cancelled. For many certificate holders will endeavor to is not good enough. The reason is they want to be notified if a contractor’s insurance is going to be cancelled so they can ask the contractor for a new certificate or get him off the job site before his coverage runs out.

This causes a problem because most contractors insurance companies will not allow the agent to cross out the will endeavor to wording. Read your contract, see what the requirements are and call your agent to work out an arrangement.

Even with the will endeavor to wording crossed out, there is no gurantee that you will get notice of cancellation.

Signature must be signed.

Acord form version - This should be Acord 25 or 25-s. there are other certificates of insurance other than the Acord form. Sometimes a city or county will have their own, or a contractors insurance company may have their own. But all the information will be there. Maybe not in the exact order of the Acord form.

Attachments to the certificate of insurance Everything we have talked about up to this point is part of the Acord Certificate Of Liability Insurance form. Now let’s talk about additional form(s) that must be attached to the certificate form. (if they apply)

Acceptance Many governmental agencies, cities, general contractors and more and more, smart homeowners will ask to be additional insured. What is Additional Insured Endorsement?

The primary reason for additional insured endorsements is defense coverage; another reason is to insulate your loss experience by making it unnecessary to make a claim under your own contractors insurance liability policy.

Here is an example: A general contractor hires an electrical contractor and asks the electrical contractor to name the general contractor as an additional insured on the electrician’s contractors insurance liability policy.

Back in the good old days the contractors insurance companies were happy to issue what is what we called a GC 20 10 11 85. (The letters and numbers are code that means Comprehensive General liability form 20 10 the last two number are the date the endorsement was published. 11 November 1985 form.

This is too bad as the endorsement provided the general contractor with a lot of coverage including unlimited completed operations coverage.

In Oregon companies are offering a few different form the CG 2010 1005 and CG 3261 1005. lets take a look at both forms and what they do.

The CG 3261 1005, this coverage form limits the coverage to on going operations which means in English, that once the subcontractor completes his job and leaves the job site the additional insured status ends. Does that mean that there is no coverage for what the sub did while he was on the job site? No. it just means that the general contractor does not have additional insured status after the sub has completed his task and left the job site. In other words, the subcontractor and their insurance company regain all of their defenses in the event a claim is brought against the subcontractor.

The CG 2010 1093 form, adds you as an additional insured, but only to the extent that you may be held liable for your work performed for the insured, in other words your sub adds you as an insured. You work will be covered only while you are doing work for that insured at the jobsite. What do you do?

The best defense is again is have a good contract, and know your subcontractors.

As an additional safeguard you should ask that the subcontractor make his insurance primary non contributory. We will discuss this in detail.

In the coverage description insist that the agency list the edition number of the additional insured endorsement they intend to use.

Make a note, the contractors insurance company should send you an actual copy of the endorsement they use. Check to make sure that the edition date matches the one on the cert. you should have it within 45 days.

Recap: Any time you hire a sub-contractor you should ask to be named as additional insured on his policy to protect yourself from errors of the sub. The same goes it you are a sub who hires a sub.

Primary endorsements- along with the above additional insured endorsement, many people are asking for primary endorsements, 99% of all contractors insurance companies have an additional charge for these as well, anywhere from $30-$250 each.

Primary insurance wording are issued in conjuction with additional insured endorsements.

Using our general contractor and electrician example above: the general contractor wants to be sure that regardless of what insurance he has (general contractor) the electricians insurance company is first (primary) on any claim. It also goes to state that the liability is determine to be solely the negligence or responsibility of the electrician.

Again if you are not sure, fax a copy of the endorsement to my office. I will be happy to interrupt you.

Certificate of contractors insurance checklist and verification procedures I know I have been throwing all this information at you and now its time to sort it out. The first thing you must do is to set a standard set of insurance requirements that all sub contractors must meet in order to work for you.

Ok, here wee go step-by-step.

Step #1


What contractors insurance requirements are you going to ask of your subs?

The certificate of insurance on the inside back cover of this book is a good example of insurance limits that most general contractors require. (except for the umbrella option) look it over, adopt this as your requirement of make changes. Remember to require your sub contractors to name you as additional insured and primary.

Remember that these requirements are yours. Asking for these limits endorsements allow you to protect your biggest asset. YOUR BUSINESS.

Step #2


Someone in your office must be in charge of certificates of contractors insurance. Depending on the size of your operation, it can be the owner or a person designated by the owner to handle the job. It has been my experience that contractors like to build things, they do not like to handle paperwork. If you are a one-man operation, make this a priority, or nicely ask your spouse to do this job. (after, you both sit down and read this book)

If you have employees, designate someone to do the job. (after, you both sit down and read this book)

P.S. Another good reason for the owner not to handle the certificates of contractors insurance is that certificates need to be verified, to verify a certificate you need to make a phone call. An office person is better suited for this job that an owner who is in the field.

Step #3


DO NOT MAKE EXCEPTIONS FOR ANYONE….NOT your brother, uncle, father, best friend since high school, current girl friend or boy friend, good buddy who is down on his luck right now, NOBODY...

Step #4


NOBODY goes on the jobsite until you have received his or her certificate of contractors insurance (with your requirements typed in) and the additional insured endorsement(s) and primary endorsements you require in order for them to bid on your project.

Starting on the next page I have put example of an insurance packet you can include with the job specs.

Use my sample packet or devise your own.

A good time to get your certificates of insurance file in good order is when you are not busy, you know, when you are between jobs. This way when your jobs start you will be ready and you will not hire subs and have to wait until they get their certificates in to you. You will already have them on file and ready to go.

Step #5

(On your company letterhead)

Insurance requirements for Sub Contractors

Dear Sub-Contractor,

In order to work for (your company), we have a set of contractors insurance requirements that must be met before you can start on our jobsite.

Please look over the requirements before bidding, to make sure you can comply. If you do not comply, your bid will not be considered.

Please provide a certificate of insurance, additional insured endorsement, with a primary and non-contributory endorsement attached. If you are not sure if you have a required insurance and endorsements, fax a copy to your contractors insurance agent for confirmation.

Your contractors insurance agent can quickly tell you if you have the correct coverage or will need additional coverage to comply.

We are looking forward to you bid.

Thank you,

Step #6


Now we have a copy of the sub-contractors certificate of insurance, additional insured endorsement, and a primary endorsement on our desk.

Using the checklist, go through each section of the contractors insurance certificate and see if anything is missing, misspelled or the dates are wrong. If there are errors call the insurance agency that gave you the certificate and ask them to make the correction s and fax a new one back to you.

Step #7


This is the area that can cause a problem and the only way to find out in advance is to ask.

For example; in Oregon, 95% of contractors insurance companies exclude Condo’s, Townhouses and apartments. If you were building one of these projects, you should call the contractors insurance agency and ask a very simple question.

Call the agency and ask the agent or customer service person handling the sub-contractors account are there any exclusions on the policy regarding condo’s, townhouses and apartments? If there answer is yes, the certificate you are holding is worthless.

If there answer is no, then kindly ask the person to send you a short note stating there are no exclusions for the condo’s townhouses and apartments.

Each state is different; there may be areas of construction in your state are a problem. You know what they are, and if you don’t, call and ask your agent.

If you are hiring a concrete contractor for house pads, a good question to ask is, are there any exclusions on the concrete contractors regarding house pads?

If you are hiring a landscaper who is going to use chemicals, call and ask regarding the use of chemicals.

If you are hiring a grading or excavation contractor, ask about exclusion regarding the use of chemicals.

Look at my list of exclusions and look at your own policy for exclusions to formulate your questions.

I realize this is more work, but the question is do you want to know about these potential problems before or after the claim?

Certificate Of Insurance Checklist
Subcontractor Name ____________Trade_______Lic.#_______
  • Contract signed
  • Certificate of Contractors Insurance received
Company’s are A rated
General liability section
  • Occurrence box marked
  • General liability limits (Minimum must match your limits)
  • General liability experience date current

Call Toll FREE
(866) 376-2510