1-888-643-2217 Email ABEX
Keeping you updated

Category Archives: Insurance

The Importance of Certificates of Insurance

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:

  1. COIs can keep companies from taking on unnecessary risks if a contractor is responsible for a loss and is not properly insured.
  2. COIs can provide protection in the event that a contractor is injured on your property while performing work.
  3. COIs ensure organizations are compensated if contracted work is done improperly or not completed.

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:

  • Is the COI provided on a proper form?
  • Is the company named on the COI the same as the one named in the contract?
  • Is the policy issued by a reputable insurer?
  • Is the COI signed by an insurance company or agency representative?
  • Are the types and limits of insurance listed on the form the same or greater than those required by you under the contract?
  • Are specific policy numbers listed on the certificate?
  • Are the dates of coverage adequate for the specified work?
  • Are there notice of cancellation provisions listed on the COI? Are they acceptable?
  • Does the COI indicate any special insurance requirements you have specified?
  • Do you require written contracts with every third party you work with, either by annual agreement for all work or by separate agreement for each project?
  • Are your files organized and do they account for contracts, COIs and any other additional insured endorsements?
  • Do you have a system in place (e.g., a certificate management system) for tracking expiration dates?

Learn More

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


Professional Liability Insurance for Design-build Firms

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.

More Information

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


Protecting Intellectual Property in Manufacturing

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:

  • Tangible assets
  • Names, phrases and branding associated with your products
  • Trade secrets and the expression of ideas

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:

  1. Address IP ownership through written employee agreements. Clearly state that you own all IP generated by employees throughout their employment and that previously created IP—such as work done during prior studies—should not be used without clear permission.
  2. Address IP ownership through written agreements with contractors and service providers. Be sure to consider IP that is owned, generated or developed by all applicable parties throughout the duration of a contract or agreement.
  3. Address licence rights and IP ownership in agreements with customers. Key topics to consider include IP ownership, IP retention, and restrictions related to use, distribution, sublicensing and assignment.

In addition to the above, organizations should consider speaking to a qualified insurance broker to better protect their IP.

© Zywave, Inc. All rights reserved


5 Major Construction Trends

In order to stay competitive and set your construction firm up for success, the following are five major construction trends to follow this year:

  1. Technology advancements—The construction industry is notoriously slow at adopting new technologies. However, firms may soon have no choice but to pivot their business practices, as 3D printing, cloud applications and drone usage will likely boom.
  2. Modular and prefabrication construction—In 2017, modular and prefabrication construction grew in popularity due to its cost effectiveness and efficiency. This trend will likely continue, especially when you consider that material prices aren’t expected to fall.
  3. An increased focus on safety—The construction industry is consistently ranked as one of the most dangerous. Following higher levels of scrutiny, expect a continued focus on crafting better safety procedures and utilizing more safety technology.
  4. Continued labour shortages—Labour shortages in the construction industry are nothing new and will likely continue to plague firms across the country. With a small pool of qualified candidates, firms may struggle to find enough skilled craft workers to meet growing demands.
  5. Sustainability—Over the last few years, firms may have noticed a greater emphasis on green products and construction practices. Sustainability will be important throughout 2018, and companies that fail to consider their environmental impact may lose out on new projects.

Organizations can’t always predict what factors will have the greatest impact on future business. However, with the above trends in mind, companies can avoid major risks and ensure they remain competitive.

© Zywave, Inc. All rights reserved


Employment Practices Liability Insurance

From hiring new workers to assigning duties, each of your decisions affects employees in a unique way. Although these actions are critical to running your business, they also create exposures that could lead to costly claims by employees or governmental regulators. Even if they are not warranted, claims for wrongful employment practices can disrupt operations, damage your business’s reputation, hurt employee morale and negatively impact your bottom line.

Thankfully, businesses can rely on employment practices liability (EPL) insurance to protect against a wide range of wrongful employment practices claims, including wrongful termination, discrimination, sexual harassment and retaliation.

Claims Scenario: Litigation Frustration

The company: An auto dealership that relies heavily on the performance of its salespeople

The challenge: A Toronto-based auto dealership employs a number of salespeople who, when performing at a high level, contribute greatly to the company’s bottom line. One such salesperson, who had put up great numbers in the past, saw a marked decline over the last few years. In addition, this salesperson had become increasingly hostile toward customers.

After frequent warnings and poor performance reviews, the salesperson was let go. However, this salesperson quickly fired back with a wrongful dismissal lawsuit, claiming they had been fired based on their age. Cases like these often fetch well over $100,000.

EPL insurance in action: One of the key benefits of EPL insurance is how it responds to actual and alleged acts. In the example above, EPL insurance can provide ample defence cost coverage, which, in turn, protects the organization and its directors and officers.

What’s more, the type of claims EPL policies respond to are vast. In fact, EPL insurance can help organizations fight claims related to breaches of contract, wrongful terminations and non-compliance with employment laws.

Claims Scenario: Take All Complaints to Heart or Get Taken to Court

The company: A small health club with only a few employees

The challenge: A local health club employs just 10 workers, most of whom are male. While the staff members seem to get along from the employer’s perspective, one of the female trainers expressed private concerns to her manager.

Specifically, the female employee felt uncomfortable with the way her male peers spoke to each other when they were around her. In addition, she felt that she was unfairly overlooked for a recent promotion due to her sex.

Because the employer felt this employee wasn’t being treated any differently, they didn’t take any corrective action or address any of her behavioural concerns. As a result, a sexual harassment lawsuit was quickly filed against the company.

EPL insurance in action: Sexual harassment cases are becoming increasingly common and can affect businesses of all sizes. While organizations need to take reports of harassment seriously, EPL insurance can help organizations respond effectively to claims.

Furthermore, many policies provide additional resources companies can use to boost their risk management practices. Notably, EPL insurance can connect businesses to human resources consultation, which can be invaluable when avoiding legal action.

Benefits of EPL Insurance

  • Coverage for alleged acts—EPL insurance not only protects organizations from actual wrongful acts, but alleged acts as well. Specifically, EPL coverage can safeguard an organization from claims related to discrimination, harassment, retaliation and wrongful termination.
  • Timely responses to lawsuits—Employees suing their employers is common, and organizations will want to be prepared. This is especially important when you consider that there is no cap on how much a jury can award and that settlements in employment-related cases can easily reach six figures.
  • Access to legal help—Strong EPL policies provide the insured with access to legal resources. This can prove invaluable if you need advice quickly.
  • Risk management strategies—While employment-related lawsuits can arise at any time, organizations that take the time to implement basic risk controls are better equipped to avoid claims altogether. Many insurance companies provide access to risk management training and human resources consulting. These services can greatly reduce the likelihood that your company is sued by an employee.

Learn More About EPL Insurance

Business leaders make decisions each day on a range of issues including things like hiring, firing, compensation, promotions and the work environment. Every one of these decisions impacts your employees and, depending on the outcome, could result in a claim related to wrongful employment practices.

Claims for wrongful employment practices are on the rise and often lead to business interruptions and costly claims. In order to truly protect your organization, it’s critical to seek EPL insurance. To learn more, contact your insurance broker today.

© Zywave, Inc. All rights reserved


Blog

FOLLOW OUR BLOG

Receive notifications of new posts automatically.



ABEX - AFFILIATED BROKERS EXCHANGE IS ON FACEBOOK.

Like us on Facebook

Connect with us on LinkedIn