Reducing Your Premium: The Importance of Obtaining a Certificate of Insurance from Your Tenants, Vendors & Subcontractors

In today’s economy, saving money any way you can is important.  Saving money on your business insurance policy is no exception.  Besides the more common ways to reduce the cost of insurance like opting to pay in full rather than installments or adopting a safety program, there are things you can do.  For one, you can make sure you obtain a certificate of insurance from all your tenants, vendors, and subcontractors before having any business relationship with them.

Having a certificate of insurance indicates that the people or businesses you are working with have insurance of their own.  You should always obtain these certificates in case of a claim situation.  For example, a subcontractor has an accident while working on your job site.  He files a claim with your worker’s comp carrier.  You fight the claim but lose because that subcontractor did not have insurance.  Without having his own insurance, your company must take the responsibility of adding his payroll to your insurance policy (which could significantly increase your premium) and paying for his workers comp injury (which could cost several thousands of dollars).  However, the whole situation could have been avoided if you had obtained a certificate of insurance from the subcontractor before work was started.

While having a certificate of insurance may not result in reduced premium, it can be a vital tool in keeping your premium down each year by avoiding unnecessary claims against your policies.  It also keeps unnecessary payroll from being rated on your policy as well.

For more information about how to reduce your premium and avoid claim activity that should be handled on your clients’ own policies, please feel free to give us a call.  We can review your policy to see if any premium reductions or credits can be applied to your policy.