It is now imperative that you obtain a Certificate of Insurance from every contractor, sub-contractor, tenant or vendor you may hire or use in your products or premises PRIOR TO THE START OF THE JOB. This certificate should name you as ADDITIONAL INSURED on the General Liability/Product Liability and should state that the insurance afforded is PRIMARY AND NON CONTRIBUTORY. The certificate should either state “All operations of the named insured or list the specific project”. The coverage must also remain in effect during the duration of the time work is being performed on your behalf and the contract has been satisfied.
The minimum limits should be no less than the limits you carry. In addition, be sure to review any contracts you enter into as they may require that your sub contractors carry and meet certain requirements beyond what your insurance carrier(s) is/are requesting.
This may not be a requirement on all policies, but most policies being issued at this point contain warranties that you use only licensed contractors and that you obtain certificates naming you as additional insured. We recommend that for your protection you make this a standard practice, regardless of whether your carrier requires it or not, due to the legal environment in California. We have seen too many horror stories from policyholders of problems they have had with vandalism or damage from prior tenants, defective work performed by unlicensed contractors and uninsured contractors where our client ended up paying to repair the damages.
We recently reviewed a claim for a contractor that occurred in January 2005 that had a certificate dated February 2005, wherein the insured provided a certificate with additional insured endorsement from the sub-contractor, which was after the date of loss. The carrier declined coverage as the insured did not satisfy the requirements of the policy as there was no additional insured endorsement in place on the date of loss, the insured’s carrier advised that their insurance did not apply and they had no duty to defend any claim or suit for damages arising out of his work. Had the contractor collected the certificate and required coverage be in place prior to the start of work, this claim would have been paid. Waiting until after work is completed to request the certificate is very dangerous as you may find the sub contractor or vendor failed to carry insurance until the time payment was needed from you.
While it is unlikely that an incident such as this will occur. This incident stresses the importance of “having your ducks in a row”, and to be certain that you obtain the necessary certificates and additional insured endorsements prior to the commencement of work to avoid this situation.
We recommend speaking with your attorney regarding the importance of collecting certificates of insurance and the verbage needed in your contracts. For more information or a quote on your insurance needs contact our office.