Builders and Remodelers: That Certificate of Liability Insurance your Subcontractor’s Insurance Company provided you may not cover your Company and the Insurance Company knows it! Builders and remodelers all know that when they are hiring a subcontractor, they need the subcontractor to provide them with a “Certificate of Liability Insurance.” What they often do not know, and the insurance company does, is that the insurance certificate you were provided might not protect your company in the event you need to make a claim. Insurance companies do it all the time, and they do it on purpose. And if you don’t know what to look for, you could have a serious problem if you have to make a claim… True Story: My client, a roofing company, we will call them ABC Roofing, signed a contract to put a new roof on a commercial building. ABC then contracted with a subcontractor to do the roof. ABC required the subcontractor to provide a Certificate of Liability Insurance, which they did, with ABC Roofing printed right on the bottom of the certificate under the heading “Certificate Holder.” Both contractors were not aware that the roof on the building had leaked for years and the substructure was in bad shape. On the first day of work a section of the roof collapsed. Luckily, no one was injured or killed. The Owner of the building made a claim to his insurance company for nearly $200,000 to put a new roof on the building Two years later, the Owner’s insurance company filed a suit against ABC to recover the money they paid to the Owner. Its what the insurance industry calls “subrogation.” The Subcontractor iwas no longer in business. ABC figured this would not be a problem because he had obtained a Certificate of Liability Insurance from the Subcontractor. However the Subcontractor’s insurance company declined the claim. The reason for their denial? The Certificate of Liability Insurance provided by the Subcontractor’s insurance company named ABC Roofing as a “CERTIFICATE HOLDER.” ?What the Certificate did not do was name ABC Roofing as an “additional insured.” Insurance companies do this all the time, hoping the contractor is unaware of the difference between a “certificate holder” and an “additional insured.” So, after being denied coverage by the subcontractor’s insurer, ?ABC went to his own insurance company, who he had been paying insurance premiums to for years. And guess what his insurance company told him? That’s right! They denied the claim because ABC was supposed to be covered by the Subcontractor’s insurance company. If you want to know how the story ends, give me a call. But more importantly, if you have not talked to a lawyer who specializes in construction law, give me a call. I will be pleased to review all of your contracts and make sure you are protected. You can reach me at (717) 975-7799 or check out my web site at www.steveonyourside.com
Great article with an important distinction.
Woo hoo! I'm now a member of the Every Day is Saturday Club!
4 个月Excellent article Steve with useful advice. Thank you for sharing.