How to read a certificate of insurance
Certificate Of Insurance
February 15, 2007 at 4:34 am
There is a possibility that there are millions of dollars wasted each year by people who attempt to use the justice system to extract money from contractors who have performed poor work. I realize that in some instances the contractor is so malicious that a court room appearance is necessary. I happen to know several contractors who are so slippery that I still can't see how they manage to stay in business and out of jail! I think the fact that Cincinnati is such a big town helps them.
Insurance Proof is Easy
I was a practicing contractor for over 20 years. Never once in my career did a homeowner ask me to produce proof that I did - in fact - have Workman's Compensation insurance. It took me 12 years in the business to find out that I could even obtain a Certificate of Insurance from my agent! My agent didn't bother to tell me about these wonderful documents. I wonder how many jobs I might have sold had I produced it along with my bid! I can see now that it would have been an excellent selling tool. There is no substitute for being up front and forthcoming with information.
Some states allow independent insurance companies to write Workman's Compensation policies. Other states offer their own government run programs. In either case, the company that has coverage gets a dated certificate from the insurer. In Ohio, the coverage extends into the future for 6 month periods of time. Thus, I can prove to a customer that I have coverage at the time the job begins and often for months into the future.
Any contractor who has such a certificate can easily make copies for you. If you get an excuse rather than an authentic copy, run away from that contractor.
Have you purchased an electronic device or an appliance lately from one of those big box stores? Often you are asked if you want to purchase an extended warranty on the item. These warranties offer different types of protection beyond the normal manufacturer's warranty. All they really are are insurance policies. Nothing more, nothing less.
You can get the same things for new houses and in many instances existing houses. As you might expect, these warranties offer different types of coverage. Some of the warranties are very limited in the coverage they offer. You have to really read the entire policy to see if you feel the coverage is worth the purchase price.
These polices can be life savers if you have a severe problem after the regular warranty expires. They are helpful because they possibly will cover the defect that causes all sorts of other problems. Remember, the Contractors General Liability policy will rarely, if ever, cover the cost to repair the original defect.
Two Warranty Companies
Here are two extended warranty companies. The one company, Residential Warranty Corporation. has a rigorous program they use to qualify contractors. In other words, there are only certain contractors who meet their standards. My guess is that the other one does the same thing.
I urge you to call these two companies and see what they have to offer. Be sure to read the entire fine print of the exact policy / warranty. Don't just go off the pamphlets or brochures. Often the policy has much more definitive language.
- Residential Warranty Corporation
5300 Derry Street
Harrisburg, Pennsylvania 17111800-247-1812
Show Me the Certificate
I know you have heard this before from countless articles. But it is true. Take the time and ask for AND get the copies of all insurance documentation. It will help you eliminate the Loser contractors. Losers often do not carry insurance.
Insurance is necessary. You need it to cover problems. The professionals will readily offer you a copy. A true professional gives it without you asking!
Finding the Professional Contractor
It is a real jungle out there and it is getting worse. All of the trade publications and contractors I know personally complain of a huge skilled labor
shortage. This means you - the consumer - are at a great risk of getting poor quality work for every dollar you spend. Here are some tips that will help you spot the professional. The bottom line for ultimate protection is product knowledge. This means that YOU must take the responsibility to get educated on the proper materials to use and the methods used to install something. With the Internet, this has never before been easier. If you know how something is supposed to be installed - even just the basics - you will quickly spot a cad who is a lost ball in the high weeds. Try the following tips:
Experience - There is NO substitute for experience. However, it is by NO means a guarantee of quality work. Why? - because I know concrete contractors with 20 years experience who still install it wrong! However, time tends to weed out the weak and financially unstable contractors. Basically it is Darwin's law of Natural Selection at work within the marketplace. Watch out for the 24 year old contractor. Look for a person with 15 years under his or her belt.
Licensed Contractors - Many states require a contractor to have a license. This is a good start. If your state requires this, then hiring a licensed contractor is your first, basic requirement. Remember that the license doesn't equate to quality - it merely means that the contractor has at least gotten to first base with respect to meeting many of the requirements it takes to be a professional.
Pay in Cash for a Discount! - If your contractor offers you this option, watch out! Cash payments are often schemes to avoid paying taxes. A professional will never ask for cash. If you want to get a "rebate", consider calling the IRS to report contractors who make a regular practice of asking for cash.
Detailed Estimates - Clearly written detailed estimates for work are usually a sign of a pro. Their clear proposals offer two way protection. You know exactly what you are getting. Watch out for those standardized one -page forms!
Start / Stop Dates - Does your contractor offer realistic start and stop dates? If so, this is a good sign. A real professional will produce a simple schedule telling you when certain things will happen. Those contractors who can't do this are impostors!
Questions and Answers - Do you get clear answers to your questions? Do they make sense? Does the contractor get defensive if you ask many questions? Use common sense here. You can't ask too many questions. Don't ASSUME ANYTHING!
Advance Payments - Professionals do NOT ask for giant, up-front deposits. They have enough financial strength to carry a job between periodic payments from you. The only time a deposit is necessary is when your job requires custom - special ordered goods at the beginning of the project.
High Pressure "Tonight Only" Offers - Need I say more. These are schemes to trick you. Why would the contractor make such a ridiculous claim.
Insurance Documentation - Because we live in a society that has an abundant supply of attorneys who need to buy food and pay for cell phones, we ALL need insurance. You need to make sure that a falling ladder will not harm a neighbor's child. You need to make sure that you are protected when that injured worker laying on his couch one afternoon calls one of those accident attorneys.
Knowledge - It is the Root of Power - Contractors who possess product knowledge are very visible. You immediately sense their ability to perform well. You can trust them. On the other hand, if you possess knowledge, you can readily spot those who don't have it. I urge you to read about how and why things work in building and remodeling. Read a product brochure. Ask questions. You will see quickly who is up-to-date.
Certificate of Insurance
A blank certificate of insurance form can be downloaded from Acord Forms website at http://www.formsboss.com/index.html. There is a place on the form for the Insurance company's name and the person/company who is insured. Be sure to ALWAYS call the listed insurance company to make sure the policy is in force and paid.Source: www.askthebuilder.com