No matter what industry you’re in, chances are your organization will, at some point, rely on the help of a third party to fulfill certain business needs. Regardless of who you work with, business arrangements with contractors and vendors can open you up to a number of risks—risks that need to be accounted for through insurance.
However, when accounting for risks related to contracted work, securing your own insurance is not always enough. It’s critical that your partners are covered as well. This is particularly important when you consider that, following an incident involving a contractor or vendor, your business could be the one held liable for any damages that occur.
To protect against this sort of risk, many organizations turn to certificates of insurance (COIs).
What is a Certificate of Insurance?
One of the main ways organizations manage and review the coverages of their partners is through COIs. A COI is a valuable—yet misunderstood—tool in the insurance industry. COIs are used across a variety of commercial business relationships and essentially serve as proof that a particular party has an insurance policy in effect.
While you may require your partners and vendors to carry insurance in your contracts, coverage needs can change quickly, making it necessary to regularly review the policies. In addition, contractors and vendors may not be honest about what risk management strategies they have in place, making you wrongfully assume you are protected.
Often only a few pages long, COIs are summary documents issued on behalf of an insurer that outline the name of the insurer and insured, essential terms and conditions, policy limits and the duration of the policy.
COIs also contain qualifying language that defines the document as informational. This means that COIs are not contracts or the legal equivalent of actual insurance policies.
The Purpose of COIs
For the insured, COIs serve as proof of coverage—proof that can be provided to customers, contractors or other third parties quickly and efficiently. COIs also indicate that the insured has the financial resources available to protect those who may be harmed by their actions.
It’s incredibly important for businesses to get COIs for every contractor or third party they bring onto a project. Even if you have worked with these third parties in the past and trust them, COIs prevent organizations from accidently taking on risks associated with the work of their subcontractors and vendors.
Before allowing contractors to perform work on your property or on your behalf, asking for a COI is a must. This can help you in several ways:
However, while collecting COIs is an important risk management strategy, there are a number of administrative considerations to keep in mind.
Managing COIs Effectively
Managing COIs can pose an administrative challenge, and businesses need to have procedures in place to collect and maintain them effectively. Many organizations choose to automate this process as much as possible, opting for systems that notify them when a COI is required but is no longer in effect.
In addition, when managing COIs, it’s important to ask yourself the following:
Securing the right insurance policy, outlining specific insurance requirements in all contracts and requiring COIs can provide all parties with peace of mind. However, securing and managing COIs can be complicated, and it’s critical to enlist the help of an experienced insurance broker.
© Zywave, Inc. All rights reserved
Design-build is a project-delivery method that provides an owner with one point of contact for both the design and construction elements of a project. This process has gained popularity in recent years largely due to its simplicity, affordability and speed.
While the design-build method has many benefits, it can expose firms to risks they wouldn’t otherwise experience during the traditional design-bid-build method. As such, it’s essential that design build firms understand all of the risk associated with the design-build process.
Unique Design-build Exposures
Unlike the more traditional design-bid-build project-delivery method, there isn’t a clear distinction between the firms performing the construction work and the architects and engineers offering their professional services. This means design builders are accountable for the accuracy of the plans, the execution of construction and the safety of the job site.
As such, design-builders can be held liable for workplace accidents, specification errors, material failures, construction errors and delays. Essentially, by taking on the design elements of a project, firms inherit more professional liability. These liabilities can result in severe financial losses.
When it comes to managing all of the new risks the design-build process brings, general liability policies are simply not enough. Under most commercial general liability policies, professional liability exposures are excluded from coverage.
In particular, claims related to the act of preparing blueprints, reports, surveys, field orders, change orders, specifications and other professional services could all be excluded from coverage. Professional liability policies are designed specifically to fill in gaps caused by general liability limitations.
For design-builders, the most effective way to protect against exposures is to secure unique insurance tailored to the sector. Specifically, professional liability policies can the proper coverage for design-build firms.
These policies provide coverage for claims stemming from an actual or alleged act when performing a professional service. Working in conjunction with other policies, professional liability insurance is a critical component to a design-builder’s risk management program. What’s more, working with a qualified insurance broker, these policies can be tailored to meet the unique needs of design-build firms.
Design-build construction is an increasingly popular approach with many benefits. However, using this method increases professional liability exposures and creates a variety of risk management challenges. When taking on design-build projects, firms have a lot to consider, including performance guarantees, licensing requirements and appropriate coverage. Contact your insurance broker today to learn about your firm’s identification options, review your exposures and bolster your risk management options.
© Zywave, Inc. All rights reserved
Some of a manufacturers’ most important assets are their intellectual property (IP)—intangible assets like patents, trademarks and trade secrets. For manufacturers, this can include, but is not limited to, proprietary information like product designs, unique processes, names and software.
Organizations that fail to protect their IP may struggle to foster innovation, keep up with the competition and reap the benefits of their inventions. The government offers a couple forms of IP protection, including patents, copyrights and trademarks. These classifications can protect things like:
While patents, copyrights and trademarks are critical, there’s more manufacturers can do. To further protect the various types of IP, consider the following strategies:
In addition to the above, organizations should consider speaking to a qualified insurance broker to better protect their IP.
© Zywave, Inc. All rights reserved
Receive notifications of new posts automatically.