A Certificate of Insurance (COI) is a document provided by an insurance company or insurance broker, that outlines the current active insurance policies held by your contractor as of the date of the COI. It states the legal name of the contractor, which type of policies they hold, the liability limits of their coverages, the effective dates and the policy numbers. It also names a certificate holder – typically the name of the individual or entity that has hired the contractor.
When hiring a contractor, many homeowners will do their diligence in identifying a reliable and licensed contractor, but asking for a certificate of insurance is sometimes overlooked. Asking your contractor for a certificate of insurance is one way to identify that you will be protected in the event something goes wrong on the job – in your home. It is not an everyday occurrence, but in the event that an employee of the contractor gets hurt or damages something in your home, the contractor’s insurance policy should cover any expense associated with that event.
Contractors should not only hold insurance policies for General Liability. They should also be covered for Worker’s Compensation. If your contractor states they have insurance, that is a good thing. But that should be supported with a certificate of insurance, as that will let you know that the insurance coverage is current and up to date. Certificates of insurance are not provided for insurance policies that have lapsed or are not paid up to date.
General Liability insurance, covers the contractor for any damage to someone’s home or property that they or an employee may create. This type of coverage also includes an injury to you or a family member that may get hurt as a result of the contractor’s negligence.
Worker’s Compensation covers the contractor’s employees should anyone get hurt inside your home while working. Without that coverage, you will be liable for the employee’s medical expenses and loss of work, and other liabilities that may arise.
Unfortunately, some contractors will try to push the topic of insurance off or will say they will have their broker send you their certificates of insurance but it will take some time, hoping that the project gets off to a start without it. That should be a red flag. Do not start a project without knowing you are protected and without receiving your certifcate.
A valid certificate of insurance not only shields you from liability for the contracted construction work, it also proves the legitimacy of the contractor or service provider. It further enforces their commitment to put their customer’s first and also provides a provision to protect their employees.
Typically, there are little to no fees when it comes to the contractor requesting a certificate of insurance from their provider, so do not feel as though you are asking too much. Nor should a contractor charge you to provide a certificate of insurance. In New York City it is illegal to operate with a Department of Consumer Affairs license, a license required by all home improvement contractors, without a valid insurance policy. Furthermore, if your project requires permits, a contractor may be delayed in obtaining those permits if their insurance coverages have lapsed and if they are not updated with the Department of Buildings.
If you live in a condo or co-op, building management will typically require the contractor to provide a certificate of insurance before entering the premises. Management also typically requires a minimum threshold of insurance coverage that may exceed a contractor’s policy limits. It is a good idea to contact your building management prior to beginning any project to ensure you are compliant with their requirements.
Hiring a licensed and insured contractor may cost you more than hiring one that is not licensed and insured. That is because the cost of doing business legally, legitimately and ethically costs more. A contractor that is not licensed, nor insured, does not pay as much overhead as one that is. It is not always about getting the cheapest price to do work in your home. It is about hiring the right professional that will do the work correctly the first time, without issue, while protecting your home and assets, and offering you peace of mind.
Thomas Folise, President – 5Boroughs Insurance Agency
(718) 766-8121 www.fiveboroughsins.com