NAEP AUSTIN TX APRIL 8, 2008. AGENDA Why we want certificates. Types of insurance and limits How...
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Transcript of NAEP AUSTIN TX APRIL 8, 2008. AGENDA Why we want certificates. Types of insurance and limits How...
NAEPAUSTIN TX
APRIL 8, 2008
AGENDA
Why we want certificates.
Types of insurance and limits
How to read a certificate
DISCLAIMER
I’m not a lawyer or insurance agent.
Focus is dealing with day-to-day vendors in a logical, reasonable way.
Why do we want certificates
Asking Vendors to be responsible for their actions/mistakes.
Don’t want to be financially responsible for their actions/mistakes.
In general, we have the deeper pockets. We are an easy target.
WHAT IS A CERTIFICATE?
A certificate of insurance is evidence that there is a policy in place.
or
A document used to provide information on specific insurance coverage.
WHAT IS A CERTIFICATE?
CERTIFICATES OF INSURANCE DO NOT
* Confer any legal rights.
* Give the holder coverage under the policies listed.
* Notify the holder of changes in coverage or cancellation.
* Provide information about whether the policies limits have been exhausted.
WHAT IS A CERTFICATE?
BOTTOM LINE
The certificate is not a substitution for the policy but is usually a reliable source of proof of coverage.
TWO STORIES
Vendor asked to side a college owned house. We had an expired certificate on file and asked
for an updated certificate. The vendor hire’s Joe as an “independent
contractor to complete the job. Scaffolding collapses and Joe eventually loses
his foot below the ankle. We are unaware that the vendor had not
renewed his worker’s comp policy.
TWO STORIES (Cont.) Had we had the certificate we would never
have let the work proceed. Vendor declares bankruptcy. The State Uninsured Fund looks to the
college. Our worker’s comp carrier eventually paid
$90,000. The vendor was low bid by $200. His worker’ comp policy was only $1,200
TWO STORIES (Cont.) Vendor is hired to repair roof on a large
classroom building. A valid certificate is on file and in the
purchasing office. Vendor failed to secure some of the
downspouts over the week-end. Heavy rain flooded the building.
TWO STORIES (Cont.) Clean-up is $25,000. Vendor and his insurance carrier
took care of everything.
MY POLICY
The College requires that all vendors who will be performing work on-campus must have a current Certificate of Insurance on file in the Purchasing Office.
The Certificate must include proof of coverage for Worker’s Compensation, Vehicle Liability and General Liability, including limits at least equal to the College’s basic limits.
College must be listed as a certificate holder and/or an additional insured.
THE CERTIFCATE
1. Date – Issue date.
2. ProducerAgency who issued the certificate.Useful if you have questions.
3. Insured Verify that the insured and the vendor to whom the
PO is issued are the same.
1.2.
3.
4. Insurers affording coverage
Do they look familiar?
If it’s important you can look up the insurancecompanies financial ratings.
4.
5. General LiabilityProvides protection for the named insured, butpayment of losses is on behalf of the Insured to a third party who has suffered the actual loss because of failure of the Insured to act as the “prudent person”.
In other words…….Provides coverage for damage to yourproperty by the vendor.
Claims made or Occurrence
Claims made – Claim must occur and be reportedduring the policy period. As long as the policy is renewed coverage is provided back to the retroactivedate (the original date of the policy)
More typical for professional liability policies.
Occurrence – Coverage applies to all injuries arisingout of occurrences during the policy period regardlessof when the claim is made.
6. Policy NumberNo number, no policy
7. Effective datesPay attention to the expiration date. That’swhen coverage ends.
6.
7.
8. LimitsHow much insurance is there?
Each Occurrence The most the insurer will pay for any one incident.General Aggregate How much the insurer will pay over the life of the policy for several incidents.
Rule of thumb$1,000,000 coverage required.Larger projects or projects with potential for large loss should require higher limits.
8.
9. Automobile
It’s a rare vendor that does not use a vehicle to performtheir job. How else would they get to your campus?
Need for non-owned coverage.
Rule of thumb. $1,000,000 coverage required.
10.Excess/Umbrella Liability
Important if the first policy does not have high enough limits.
Size/scope of the project demands higher limits.
THE CERTIFICATE (Cont.) 11. Worker’s Compensation
Varies by StateProblem of Independent Contractors - Massachusetts
- By law they are not required to buy worker’s compensation coverage.
- They have the ability to “opt in”.- Independent contractors often use other independent
contractors to complete jobs.- The State will often view you as the employer should
something go wrong.- Too much at risk to allow them on campus- We make rare exceptions.
Rule of ThumbStatutory Limits
THE CERTIFICATE (Cont.)
FloridaNot required to have coverage if they have
four or less employees.
This does not remove their obligation to the employee.
If something goes wrong will they have the means to pay?
12.Description BoxWhat does it say?Any special conditions/exclusions?This is where you would be listed as an additional insured.
Additional Insured:“Springfield College is an additional insured with respect to liability.”
The college is now protected under the terms of the contract. Typically the vendors policy covers the legal fees in addition to any payouts for injury or damages due to their negligence.
13.Certificate Holder
Should be you.
Don’t except certificates issued to others as proof of insurance.
14. Cancellation
Typically 30 days
No guarantee you will be notified in time because you donot have any right to notice of cancellation.
13. 14.
What’s not acceptable?
A certificate issued to someone else.
A copy of their actual bill.
Front page of the policy.
Affidavit declaring they do not need worker’s compensation by law.
