At Clinard Insurance Group in Winston Salem, NC , we make it a top priority to help our friends and clients with information that helps them protect their assets.  One mistake many homeowners make is to let a contractor begin work at their home without first checking to be sure that this contractor has the right insurance protection for his or her business.  There is a quick and easy way to do this and this practice is standard in most business to business (B2B) type transactions. 

Before you let that plumber or landscaper or any type of repair worker begin a job at your home, you should first determine that they have insurance protection so that if someone is injured, or your property is damaged, you don’t have to file anything under your homeowners insurance policy.  Simply ask them to have a certificate of insurance sent to you.  This is a simple task, all the contractor will have to do is ask his insurance agent to email, fax or mail you a copy of this certificate.

Once you receive the certificate of insurance, what then?  Well, there are a couple of things you want to look at closely.  First of all, make sure that your name and address is .listed in the certificate holder section.  And make sure that the certificate came from the contractor’s insurance agent and not from the contractor himself.  This will increase the odds for you that the certificate is genuine and that the listed insurance coverage is actually in force.  Believe it or not, there is an active market selling fake insurance certificates, I have even seen them for sale on ebay.

 These certificates break down the insurance protection by policy type, so there will be a section for General Liability Insurance, Workers Compensation Insurance, Business Auto Insurance and Umbrella Insurance.  Next you want to check and be sure that there is a policy number showing in the General Liability Insurance Section and in the section for Workers Compensation Insurance.  These are the policy types that will be most important to homeowners..

Once you have verified that your contractor has these two types of policies in place, take a quick look at the limits of coverage.  A North Carolina workers compensation policy will pay claims based on the statutory regulations so you won’t really need to worry about the limits there.  But in the general liability insurance section, you want to be sure that the amount of coverage showing is high enough to satisfy you.  Think about the worst case scenario of damage that this contractor could do to you, your family or your property and make sure there is enough of a limit there to pay for that loss.

Many homeowners just hire contractors to work in their home without giving insurance any thought at all.  But some contractors cut corners and may not have enough insurance or any insurance at all.  If they cause you a large loss to your health or your property, you may find yourself with no recourse. At Clinard Insurance Group in Winston Salem, NC, we want all of our homeowner clients to be safe from an un-insured contractor.  If you have a certificate of insurance and are not sure how to read it, please contact us by calling, toll free 877-687-7557 or visit us on the web at http://www.clinardinsurance.com and we will help you understand exactly what the certificate your contractor gave you covers.

I work with contractors every day, helping them with their general liability and workers compensation insurance policies and I am struck by how many of them have heard of insurance certificates but how few really understand why they need them.  If you have anyone working on your job site without first having given you a certificate of insurance, you are probably increasing both your insurance costs and your liability exposure.  Here is a quick guide on what you need and why you need it when it comes to certificates of insurance.

As you probably know, your general liability and workers compensation policies are both rated based on the payroll your contracting business generates each year.  And if you don’t know it already, you will soon: That payroll is audited each year and your insurance policy premium is adjusted to reflect the actual payroll you incurred that year.  So, the last thing you want to do is have that payroll number inflated by a subcontractor that you hired to help you out with a job that was a little bit outside of your specialty.

Let’s take an example.  Let’s say you are a carpenter.  You are hired to handle a kitchen remodeling job for one of your clients.  In the process there is some minor plumbing work to be done and to help out your client, you find the plumber and just sub the work to him and you bill your client for his services.  That’s all good business but you must remember to get that certificate of insurance from you plumber before he sets foot on your job site.  Why?  Two reasons really. 

First of all, that certificate of insurance will tell your insurance company that your subcontractor (in this case the plumber) did have insurance so the cost of the plumbing work won’t be added to your total payroll at audit time.  This will save you a lot of money in insurance premiums.

Secondly, you can take a moment to make sure that this plumber has the correct coverages with high enough limits to protect you.  Look at the certificate carefully and make sure that your subcontractors are carrying limits at least as high as yours.  Next, make sure that the certificate is showing both workers compensation and general liability insurance coverage.  If not, you will be on the hook for the premiums for the missing insurance policies for your sub contractor.  Last of all, take a moment to make sure that there are no exclusions or policy coverage limitations spelled out in the certificate.  If your subcontractor has an excluded coverage and your policy covers it, you might find yourself on the hook for extra premium at audit time.

Many contractors remember to ask for certificates from the other contractors working on their job site.  But a large number don’t take the time to read the certificate and check to make sure that it meets all the criteria they need to protect themselves from an extra premium at audit or a large loss charged to their own policy.  If you are a small contractor and would like help understanding your insurance certificate or your insurance coverage, be sure that you are dealing with an agent who specializes in contractors liability and workers compensation insurance policies.  At Clinard Insurance Group in Winston Salem, NC, we insure many, many artisan contractors all of North Carolina and we can help you understand how to set up your policy correctly and keep your insurance audit premium surprises to a minimum.  Feel free to call us for help, toll free at 877-687-7557 or visit us on the web at http://www.clinardinsurance.com.