You can’t tell from the certificate alone. To confirm a subcontractor’s coverage is still active, check with their broker or carrier, re-request certificates on a set schedule, and ask for notice if the policy is canceled.
A certificate of iInsurance (COI) is a document a policyholder receives to show clients, vendors, and landlords that they have coverage without needing to share the entire policy. However, because it’s only a snapshot of coverage from the time it was issued, there’s no guarantee it’ll still be active six weeks into a project.
Many contractors collect certificates before work starts, record the expiration date, and assume subcontractors will remain insured until the policy is up for renewal. The problem is, this assumption creates a gap between the documentation and the actual coverage available when a claim arises. This article breaks down practical ways to verify subcontractor insurance is still active throughout a project.
Key Takeaways:
- A COI shows coverage on the date it was issued, not today.
- A policy can be canceled mid-project without the GC being told.
- The broker or carrier is the only direct confirmation.
- Re-request certificates before expiration, at milestones and before high-risk work.
Why Isn't A COI Enough To Prove Coverage Is Still Active?
A COI is useful for helping general contractors review the insurance coverage in effect when the certificate was issued. This is important for making an initial check to see if a subcontractor meets the project’s insurance requirements before the work begins. However, it doesn’t lock that coverage into place for the project’s full duration.
For example, after the project begins, a policyholder could cancel coverage, miss a premium payment, or make changes to their policy. While these actions can completely change the coverage available, unless your contract requires it, the subcontractor usually isn’t obligated to tell you. As a result, general contractors could find themselves paying unexpected costs when an accident or property damage occurs, even if the subcontractor’s COI hasn’t yet expired.
How Can You Manually Confirm A Subcontractor's Coverage Is Still Active?
General contractors that want to verify a subcontractor’s current coverage aren’t limited to one initial inspection of their COI. For subcontractor insurance verification, they can reach out to the subcontractor’s carrier or broker directly for current information and request updated certificates throughout the project to check for changes in coverage. While possible, these manual checks are time-consuming and require a system and consistent follow-through.Some insurers will add an endorsement that sends you notice if the policy is canceled. If you need that, require it in your subcontract.
For example, a general contractor could set up a spreadsheet to track each subcontractor, their policies, expiration dates, and responsible brokers. They then could assign an employee to conduct follow-ups and update the records. However, this can lead to delays and missed follow-ups as the list of subcontractors grows longer.
Should You Contact The Insurance Carrier Directly?
The best way to verify the current status of a subcontractor’s policy at a specific point in time is direct confirmation from the carrier. The insurance broker can also get the current information and explain changes, but they are an intermediary between the carrier and policyholder. Both options allow general contractors to obtain current coverage information instead of solely relying on an older COI provided by the subcontractor.
Keep in mind, confirmation isn’t always immediately available. Carriers may need authorization from the policyholder or require requests to go through the broker. Because of this, general contractors that need to manage a large number of follow-ups could face delays in getting the information they need. Overall, manual verification is possible, but the repeated outreach and follow-ups needed can keep staff from putting their time toward other tasks.
How Often Should You Re-Request A Certificate?
There is no guaranteed schedule for certificate of insurance monitoring that eliminates the risk of coverage gaps. Each general contractor needs to build a schedule that fits the project duration, policies, contract requirements, and risks associated with the work.
To start, it’s a good idea to reach out to the subcontractor or their broker 30 days before a policy expires to request renewal documentation. General contractors may want to add additional checks around major project milestones or before work with higher risk starts. They could structure their routine reviews in monthly or quarterly intervals to keep things consistent and easy to manage. While no amount of checking can completely remove the possibility of a coverage gap, the more frequent the checks, the less likely changes in coverage go unnoticed.
What Happens If A Subcontractor's Coverage Lapses Mid-Project?
No matter how diligent a general contractor is, there is always the possibility that a subcontractor’s coverage changes or stops mid-project. Because of this, it’s essential to consider the potential consequences of a subcontractor coverage lapse.
Here’s an example of how a mid-term lapse could expose a general contractor to unexpected costs. Let’s say a subcontractor cancels or changes their policy midway through a renovation and then accidentally damages a property. Even though the general contractor can point to the original COI and cite the policy and expiration date, it doesn’t prove that coverage was in effect when the damage happened.
In this situation, the general contractor could face claims, defense costs, or difficulties recovering losses from the subcontractor due to a lack of coverage. The financial impact depends on the contracts, law, policy terms, and circumstances surrounding the accident. In some cases, the general contractor won’t be fully liable, but could still incur costs. There’s also the issue of how a coverage gap can affect the progress of the project. It may take time to resolve the issue, which could pause work or require the subcontractor to secure new insurance coverage.
Without consistent checks, a general contractor could find themselves in a tough spot when an accident occurs. Just because the COI states the subcontractor will be covered to a certain date, doesn’t mean the policy will remain active until that time.
Can COI Tracking Software Catch a Mid-Term Lapse?
COI tracking software takes the manual work off your team. It tracks every expiration, requests renewals on schedule and flags certificates that don’t meet your requirements. Catching a mid-term cancellation is harder. That depends on whether the platform hears from the carrier or broker, so ask each vendor exactly how they handle it.Instead of using spreadsheets and staff to manage insurance records and renewals, platforms review documentation and keep track of follow-ups. This automated process cuts back on missed renewals and human error that could result in unexpected costs. Compare platforms in our guide to the best COI tracking software.
How Does illumend Keep Subcontractor Coverage Verified After The COI Is Received?
For effective insurance compliance and subcontractor coverage tracking, switching from manual COI tracking to a COI tracking software can help general contractors avoid costly coverage gaps. illumend, from myCOI, is an AI-powered insurance compliance platform that helps teams easily manage insurance documents and track compliance requirements.
The platform uses an Lumie, the AI expert for insurance compliance. Lumie reviews all submitted COIs and endorsements to make sure they meet the project’s requirements. Through its continuous monitoring and proactive gap detection, it identifies issues and helps teams address them before they become problems.
illumend also offers a Procore integration, which connects subcontractor insurance compliance information with construction teams’ existing workflows. This makes it easier to access records and status information during day-to-day project management.
To learn more about how ongoing COI verification and automated renewal outreach can help your team reduce the risk of coverage gaps, schedule a demo with illumend today.
