Tell me if you have ever been in this spot: You just finished a job as a sub-contractor and you are ready to get paid. Your costs for this job are high but you are hoping to eke out some profit and you really want to believe that the economy is rebounding and it will get better from here. Then it happens once again: you are told you will not be paid because your insurance certificate is not correct. You don’t have time for this and you can’t afford it.

Why does this keep happening and what can you do about it? Read on for three simple steps that will provide relief for this common but unnecessary problem.

Step 1: Make sure you are working with an insurance professional who specializes in contractors

It is critical that you work with an agent who understands the needs of what you do. While almost all businesses need certificates from time to time most do not have the same kind of volume and requirements that contractors have. When choosing an agent relationship ask questions about the types of businesses they insure the most to see if they understand your needs.

Step 2: Ask your agent about what you can expect regarding how certificates are issued

Here are some questions I would recommend asking and some “red flags” to look out for:

  • What kind of turnaround can I expect when a certificate is requested? The correct answer to this is “the same day the request is received.” If there is any other answer besides this I would recommend looking for another agent that specializes in the needs of contractors.
  • What if I need additional wording on the certificate like additional insured? Your agent should be able to provide you with options that will provide the best fit for your business. If additional insured language is required by most of the companies that request your certificate the best option would likely be a blanket form so that you do not have to add each one. However if this type of wording is only requested two or three times a year then scheduling additional insured’s individually on the policy would likely be more cost effective. This also goes for other wording often required such as “waiver of subrogation” as well.
  • How much do certificates cost? If an agent charges you for a certificate of insurance my opinion is you need to find another agent as soon as possible. The issuance of certificates is part of the agent’s job and additional fees should not be added for this basic service.

Step 3: Make sure that you obtain the full certificate requirements

Commonly companies will refuse paying subcontractors because of undisclosed certificate requirements or requirement changes. The sad reality is it benefits the general contractor to hold your money and they are not in a hurry to get you paid. Often in these situations the insurance agent is blamed for not producing a “correct” certificate when in reality the requirements changed without notice. Fortunately most general contractors do not operate like this but to be safe I would recommend the following:

  • Always require the full certificate requirements in writing BEFORE you start working and send these to your agent
    This way your agent can make sure the certificate is issued correctly and it provides documentation that these are the requirements that were asked for.
  • Once the certificate is issued request a written confirmation that everything is in compliance BEFORE you start working
    Once the written notification is received be sure to keep this stored in case it is needed if a dispute is raised later regarding the certificate and payment.

The bottom line is you should never have your money held up because of a certificate of insurance. Everyone makes mistakes but if you are working with an agent that understands contractors this should rarely happen and if it does it will likely be for reasons outside the agent’s control. Despite this by taking these three simple steps your certificate woes should become nothing more than a bad memory.