Certificate Of Insurance For Contractors

[Adron]

Hi, Your answer was very informative.  I would like to ask you about a little something more, although you pretty much answered it in your last sentence.  The case where a contractor who is a sole proprietorship and does not have insurance or in the case of a corporation whose employees are all officers and exempted themselves from obtaining coverage(allowed in Florida).  I understand then that I should get an agreement(with appropriate legal language) releasing us from any liability.  Do you have any idea how common this situation is?  And whether you know of attempts by lawyers to break the agreement anyway if something happened to the contractor?

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Followup To

- Hello, I was told by our agent that we should obtain a certificate of insurance for any contractor who comes on our premises to verify workers compensation coverage.  But there are situations where a contractor does not have them I think.  Such as sole proprietorships and corporations where all employees are officers and exempt themselves from wc coverage.  I'm trying to gauge our liability for such situations.

Art

[ScIymgeour]

Art;

Having an agreement that releases you from liability is extremely common. Most simply put, it's called a Hold Harmless Clause. Basically, an agreement states something to the effect of, "It is understood that any injury that occurs while performing your duties as described in this contract, will be covered by your own workers compensation policy. If there is no policy in effect, you agree to Hold Us Harmless in the event of any accident or injury that is not a direct result of our negligence."

Now that last statement is the key to your question. If an injury occurs and it could be determined that you, in some way contributed to it, an attorney could make an argument that you are responsible and that the agreement should not be enforced. To my knowledge, unless you truly were at fault, negligent in some way, it would not be common for the agreement to be challenged. And as I said before, having an attorney draft such an agreement with the appropriate wording will reduce the likelihood of a challenge as well. I hope that helps! And of course, if you need more information or have additional questions, feel free to email me again. Kristen

[Rickard]

- Art;

Your agent was correct in giving you that advice. To put it simply, YOU are providing the workers compensation coverage for any one you've hired that does not have any coverage of their own. This is true for General Liability too. Let's say, for example, that you don't own the building that your business is located in and you hire an electrician to do some work. He winds up starting a fire and causing a great deal of damage. If he doesn't have his own General Liability policy, then yours will be the one that pays for the damage. I'll go one step further than your agent. First, you should ALWAYS ask for a Certificate of Insurance verifying that their limits of insurance are equal to, or greater than your own. Secondly, you should ask to be named as an Additional Insured on the Certificate. VERY common practice, an experienced contractor will have had this request many many times. And lastly, the language in some insurance policies(depends on the company) has changed lately and Certificates of Insurance are only good per job. So let's say you hire that electrician we were talking about, you get the Certificate, you're named an Additional Insured and the job is complete. 3 months later, you hire him again, you need to obtain a new Certificate with the same Additional Insured status to be fully protected. Now, specifically with the workers compensation coverage, companies can usually purchase that coverage whether it's a sole proprietor or just executive officers, depending on the state you're located in. If you have a contractor that you like doing business with that does not have coverage of their own, have them sign an agreement releasing you from any liability should he/she be injured while doing work on your behalf. Consult with an attorney to make sure the language is sufficient. I hope that this information is helpful and if there's anything else I can answer for you, feel free to email me again. Kristen