FV Blog

By: Jake Knight J.D. CRIS, IMA Financial & Pete Wiggins, MBA, FIRST, VERIFY

Today, it’s not uncommon for companies to require that any contractor working at their facilities or job sites provide them with proof of a defined level of insurance coverage that includes a waiver of subrogation.

But what is a waiver of subrogation? Before explaining this, one must first understand what subrogation is. From a legal standpoint, subrogation means the right of one person (the subrogor) to step into the shoes of another person (the subrogee) to pursue claims and remedies available to the subrogree. In the insurance context, subrogation occurs when an insurance company pays its insured and then sues the entity or person responsible for the loss to recover the amounts paid to or on behalf of the insured. The insurance company steps into the shoes of the insured and exercises any rights the insured might have against the responsible party.

In all fairness, some in-house systems work very well. Smaller companies that only deal with a limited number of contractors at one location are often successful. Large companies that are willing to invest the resources needed can also have successful systems. The challenge comes once a company has grown beyond the small in-house system and it’s no longer easy to verify the needed information.

Many companies view the cost of maintaining a prequalification department as too expensive for the benefit gained. They usually fall back to setting standards that contractors should meet and charging their project management, Safety and Purchasing teams with enforcing them.

The numbers listed below correspond to blocks of information on the sample ACORD Certificate of insurance. To see the sample certificate fill out the form below.

  1. Date The date the certificate of Insurance was prepared.
  2. This certificate is issued as a matter of information only and confers no rights upon the certificate holder. This statement expresses that the intent of the certificate is to show the certificate holder that the insured has purchased the insurance coverages listed on the certificate.
  3. Producer is the insurance broker that wrote the insurance policies for the insured party.
  4. Insured is the entity for whom the policy is written and is the primary insured. This entity is the party that has been requested to provide proof of coverage.
  5. Coverages This statement conveys that the listed insurance policies were issued to the insured and the coverage issued is subject to normal policy, terms, exclusions and conditions. Limits of coverage may be lower due to claims already paid out during the policy period.
  6. Type of Insurance Column This is the column where each type of liability coverage is listed. I.E General Liability, Automobile Liability, Excess Liability, etc.
  7. Claims- made and Occurrence There are two types of general liability coverage. Under a Claims Made policy coverage is provided for any occurrence taking place during the coverage period and the claim must also be made during the period of coverage. Occurrence coverage provides coverage for occurrences that take place during the period of coverage regardless of when the claim is made. Occurrence coverage is the desired coverage. Claims-made coverage is rarely used today.
  8. Companies Affording Coverage The companies providing the insurance coverage.
  9. Policy Number Column This is the column where each policy number should be listed.
  10. Policy Effective Date Column This is the column where each policy’s effective date is listed.
  11. Policy Expiration Date This column lists the date of each policy’s expiration.
  12. Limits Column The policy limits for each coverage is listed in this column.
  13. Special Descriptions description of site and or location codes and listing of additional insureds. This is where your company would be listed as an additional insured.
  14. Certificate Holder - Entity to which the certificate of coverage is listed. The certificate holder is not entitled to any rights of the insurance policies listed unless it is listed as an additional insured on the actual insurance policy.
  15. Cancellation Statement of the amount of time the insurance company will “endeavor” to provide the certificate holder on cancellation of the policies. This notice also states that the insurance company will not be liable if the notice isn’t given.
  16. Authorized Representative The individual at the insurance company or brokerage that is authorized to sign or issue the Certificate of Insurance.

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