Seven Mistakes You Are Making Tracking Certificates of Insurance
- We don’t do it. I know, it’s like going to the dentist. You know you have to do it but you’d rather not. But if you don’t transfer risk you’re the one who, sooner or later, will be stuck with a third-party liability claim. All it takes is one to make your life miserable. So, do it!
- We don’t have uniformity in our contractual requirements. Usually very few companies do. You’ve got grandfathered agreements, ones you’ve inherited from that last purchase, and many that were handled by a variety of folks, all with their own ideas about what proper insurance coverage is. The solution is first to go through the material and get it organized. Summarize what your agreements ask for. Set up a meeting with Risk Management, your insurance agent or risk consultant. Agree on standardized insurance requirements going forward. Then apply them consistently.
- We don’t know who our vendors/tenants are (yes, that actually happens...) Keeping up in a fast-moving environment can be challenging. Vendors/tenants come and go. Who’s on first? A good source of information about vendors is the Accounts Payable department as they’re the people that are paying them. Ask for a list of all vendors paid in the last 90-180 days. That’s a good start. If it’s tenants you’re trying to get a handle on, talk to Leasing. Get the rent roll. Then, set up a procedure to get a weekly “move in/move out” list so you can stay current. It’s the only way to stay on top.
- We get the certificates of insurance but don’t really look at them. I remember walking into the Risk Management office of a large public REIT. I asked where their COIs were kept. Someone pointed to an overflowing box in the corner. Need I say more? If you don’t look at the COIs and compare them to the requirements you are not doing the job necessary to reduce your exposure.
- We look at the COIs but don’t follow up to get them corrected. This is called half a loaf. The idea behind have insurance coverage requirements is that they are to be enforced. You must get on the phone, preferably to the insured’s insurance agent, and get the deficiencies fixed. This is the hard part, the frustrating part, the part where calls aren’t always friendly and pushback is common. Put on your helmet and do it. Period.
- We don’t really know how to read the COIs properly. Let's be honest - insurance information is technical, full of detail, “what ifs” and “it depends.” You need to know how to run the traps, interpret the language and know the laws of individual states. This is not for the meek! The best solution is to get your reviewer licensed by the state as a Property and Casualty broker, or to hire one.
- We really don’t know how to track certificates. OK, at least you admit it! So, get a hired gun. There are several outsourced certificate insurance tracking services available to help you. The best of them will take the burden off your desk (nearly) completely, allowing you to do your real day job and not worry about what you don’t understand.
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