Is a Certificate of Insurance Enough? What to Verify Before Hiring a Subcontractor

You hire a subcontractor for an upcoming project. Before work begins, you request their Certificate of Insurance (COI), receive the document, save it to your files, and consider the insurance requirement handled.

But is having a COI enough to protect your business?

Not necessarily.

Certificates of Insurance are an important part of subcontractor risk management, but collecting the certificate should be the beginning of your review—not the end.

For contractors and other businesses that regularly rely on subcontractors, understanding what a COI does and doesn't tell you can help prevent costly surprises after an accident.

What Is a Certificate of Insurance?

A Certificate of Insurance is a document that provides a snapshot of certain insurance coverage carried by a business at the time the certificate is issued.

Depending on the policies involved, it may show information such as:

• Insurance carrier
• Policy type
• Policy number
• Effective and expiration dates
• Coverage limits
• Named insured

This information can help you verify that a subcontractor appears to have required coverage in place.

But there's an important distinction:

A certificate is evidence of insurance. It is not the insurance policy itself.

The actual policy, endorsements, exclusions, contracts, and circumstances of a loss determine how coverage may respond.

1. Are the Coverage Limits Adequate?

Don't simply check whether a subcontractor has general liability insurance.

Review the limits.

A subcontractor performing relatively low-risk work may present a very different exposure than someone performing structural, electrical, roofing, excavation, or other higher-risk operations.

Your insurance requirements should reflect the type and size of work being performed.

2. Are the Dates Current?

A certificate showing an expired policy doesn't provide much reassurance.

Before work begins, confirm that the policies shown on the COI are currently effective and that coverage is expected to remain in place throughout the project.

For longer projects, businesses should also have a system for tracking expirations and obtaining updated documentation.

3. Are You Actually an Additional Insured?

This is one of the most common areas of confusion.

A COI may indicate that additional insured status applies, but the certificate itself generally does not create that coverage.

The actual policy endorsement matters.

If your contract requires your company to be included as an additional insured, work with your Risk Advisor and legal counsel as appropriate to determine what documentation should be collected.

4. What Does Your Contract Require?

Insurance and contracts should work together.

Your subcontractor agreement may address requirements involving:

• General liability limits
• Workers' compensation
• Commercial auto insurance
• Additional insured status
• Waivers of subrogation
• Primary and noncontributory wording
• Indemnification provisions

The exact requirements should reflect your operations and contractual relationships.

Insurance requirements copied from an old contract may no longer fit the work you're performing today.

5. What Happens If the Subcontractor's Coverage Lapses?

Risk management shouldn't end once the subcontractor arrives on the job.

If coverage expires halfway through a six-month project, your company may suddenly be working with an uninsured or inadequately insured subcontractor.

Creating a consistent process for collecting, reviewing, and updating insurance documentation can help reduce that risk.

Why This Matters to Your Business

Imagine a subcontractor causes significant property damage or an injury occurs on your jobsite.

Multiple companies could become involved in the resulting claim or lawsuit.

That's not the moment you want to discover that a policy expired, limits were inadequate, an expected endorsement wasn't in place, or the subcontractor didn't carry the coverage you thought they did.

Proactive risk mitigation means asking those questions before work begins.

A COI Is a Starting Point, Not a Risk Strategy

Certificates of Insurance are valuable tools, but they shouldn't create a false sense of security.

A stronger subcontractor risk-management process looks at the complete picture: who you're hiring, what work they're performing, what your contract requires, what insurance they carry, and how those risks connect to your own insurance program.

How Strong Is Your Subcontractor Risk Process?

If your company regularly hires subcontractors, now is a good time to review more than the certificates sitting in your files.

Contact one of the Risk Advisors at Fortis Risk Group for a comprehensive policy and risk review. We'll help you evaluate your subcontractor insurance requirements, identify potential coverage gaps, and develop a more proactive approach to protecting your business before the next project begins.

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