Workers compensation certificates of insurance rule the contracting world. For more detailed information about certificates of insurance check with Workers Compensation Consultants, a professional workers comp consulting firm, who provides help with certificate of insurance issues. Be sure to check with them if you have any questions about workers compensation certificates.

In this hub I will discuss the importance of insurance certificates and the important role they play in the over all scheme of managing the reduction of workers compensation insurance cost for contractors.

A certificate of insurance is simply an informational document issued by an insurance company or insurance agency that provides proof of insurance. The certificate of insurance plays an important role in commercial transactions by supplying policy information to third parties, other interested entities, about the type of and existence of workers compensation insurance coverage.

Certificates of insurance are often asked for when a contract between two entities exists. Many times the contract will require that the insured or policy holder maintain workers compensation coverage for a certain period of time as a condition of the contract at which time a certificate of insurance is issued to provide that information.

The most accepted certificate of insurance form is produced and copyrighted by ACORD. ACORD is the Association for Cooperative Operations Research and Development, a world wide nonprofit organization charged with standards development for the insurance industry. Their mission is the development of data standards and standardized industry forms used within the industry.

The typical workers compensation certificate of insurance will contain:

• Name and address of the insurance producer, agency
• The name and address of the "named insured" or policy holder
• The date the certificate was issued
• Name of the Insurance Company
• Policy number
• Policy period dates, when coverage began and when it should end
• Proprietor, partners, officers inclusion or exclusion indicator
• Statutory limits indicator
• Employers liability limits
• Description of operations or special items
• Name and address of the certificate holder, the one who requested the certificate
• Cancellation wording
• Signature of the person issuing the certificate

The ACORD certificate of insurance form is a copyrighted document. Anyone using an ACORD certificate form without permission may be subject to statutory copyright violations. No one other than ACORD is permitted to modify or alter these copyrighted forms.

BE AWARE, there is a trend out there where those requesting certificates of insurance are asking for multiple changes be made to the document. The primary change being asked for is the striking out of the "___ days cancellation" notice as provided under the copyrighted form among others. It is a violation of copyright laws to modify a certificate form.

Why do folks ask for changes to certificates? To better protect themselves! You do have to be careful with certificates. I've witnessed many situations where certificates have been modified to meet the demands of a contract. Modifications that should not have been made, modifications made by insurance agents who were put under the gun by clients who were pressured with the threat of not being awarded a job. Not a good thing!

So, there's some background information on certificates of insurance. Now let's talk about how certificates effect a workers compensation policy for contractors.

When a contractor hires another contractor to perform work either under a contract or not, the primary contractor will ask for a certificate of insurance from the sub-contractor. The sub-contractors certificate should indicate workers compensation coverage is in place and that the policy period covers the period of time in which the sub-contractor will be performing work for the primary contractor. When presented with a proper certificate the primary contractor, in general, will not be charged a workers compensation premium for the sub-contractor's crew.

In lieu of a proper certificate, when the primary contractor's insurance company performs the audit at the end of his workers comp policy period, the primary contractor will be charged for the sub-contractors exposure created on the primary contractors workers comp policy. Reason-if an uninsured sub-contractor's employees are injured on the job, the primary contractors workers comp policy will respond and provide coverage for the injured sub-contractors employee. So if coverage is provided, then premium needs to be paid. It's a simple concept, but one that creates many problems

Now, this scenario applies for most states however you must keep in mind that each state is different. Some states treat contractors differently and you must be aware of the work comp rules and laws for your state.

 Workers compensation certificates of insurance are tricky! Here's what I didn't tell you....certificates are only an indication that the coverage represented on the form is in place on the day the certificate is issued! There's no guarantee the policy is in force the day after the certificate was issued!

As far as requests for certificates go you will find there are uninsurable requests, impractical requests and illegal requests being made all the time. Companies are continually trying to change the certificate form from an information document to one of a contract when in fact is cannot be done.

So my recommendation to you is BE AWARE about certificates. Take them for what they're worth, a silly piece of paper that rules the contracting world! And don't forget, if you need more information or if you have any questions about certificates of insurance contact Workers Compensation Consultants.

Thanks!