Any company can be exposed to risk when hiring the services of outside independent contractors or subcontractors. The goal of any business owner or risk manager is to reduce exposures and protect their organization’s financial interests. Transfer of risk to another party through a combination of contracts and insurance is one method that can be used.
A certificate of insurance form is a standardized document that provides evidence of insurance coverage. It will include the contractor’s coverage types and liability limits. Other information that you request may be listed on the document under the Description of Operations/Locations/Vehicles section.
When your company hires subcontractors, it is extremely important to get a certificate of insurance from each subcontractor working for you. Even if you trust your subcontractors and have worked with them in the past and knew they carried insurance at that time, you should require them to provide an updated certificate of insurance each time you hire them for a new job.
At minimum, Telcom recommends requiring subcontractors doing work for you to carry the following limits:
- General Liability in the amount of $1 million per occurrence and $2 million aggregate
- Auto liability at $1 million limits
- Workers’ compensation at statutory limits
We also recommend that subcontractors carry at least a $1 million umbrella policy as an additional layer of protection and that the subcontractor list your business as an additional insured on the certificate of insurance.
Our goal is to protect you, and obtaining a certificate of insurance before the work is started will help us to do so if that contractor does damage or is injured.