Transferring Risk via COIs
In construction, liability can shift quickly—and the financial consequences can be severe.
That’s why a Certificate of Insurance (COI) is more than a formality. It’s tangible proof that your subcontractor carries active insurance, such as general liability, workers’ compensation, or commercial auto coverage.
General contractors and project owners require COIs from every subcontractor because it reduces their own liability exposure. If a subcontractor causes property damage or an injury and lacks valid insurance, the responsibility could fall on the general contractor—or even the owner.
According to getbcs.com, requiring a COI from every subcontractor is a foundational risk mitigation practice in professional project management.
Protecting Yourself from Subcontractor Risks
Without a COI, you may unknowingly absorb the liability for a subcontractor’s mistakes.
Here’s how it plays out:
- A subcontractor damages a structure or causes a worker injury.
- Their policy has lapsed, or they were never insured to begin with.
- The general contractor’s insurance is triggered, or worse—the owner faces exposure.
Why You Need to Collect COIs:
- Transfers risk to the subcontractor’s policy.
- Confirms the sub meets contractual insurance requirements.
- Protects your policy limits by preventing unnecessary claims on your coverage.
- Reduces the chance of lawsuits, claim delays, or costly legal gaps.
Simply put, if a subcontractor isn’t covered, you could be.
What to Look for on a COI
Not all COIs are created equal. Here’s a quick guide to reviewing one:
✅ Key Elements to Check:
- Policy Types – Look for:
- Commercial General Liability (CGL)
- Workers’ Compensation
- Commercial Auto
- Umbrella/Excess Liability (if required)
- Policy Limits – Ensure the coverage meets or exceeds the limits outlined in your subcontract agreement. For example:
- $1M per occurrence / $2M aggregate for CGL is common.
- Higher thresholds for large commercial projects.
- Effective and Expiration Dates – The policy should be current for the full duration of the subcontractor’s work.
- Additional Insured Section – Confirm your company or project owner is listed here. If it’s not, a separate endorsement should be attached.
- Waiver of Subrogation / Primary & Noncontributory Language – These may be required per your contract and often appear in endorsements, not the base certificate.
📌 Important Tip: A COI is only a snapshot. It is not a guarantee of coverage, which is why verification is crucial.
Best Practices for COI Collection
Managing COIs effectively can be the difference between confidence and chaos.
✔️ Before Site Access:
- Never allow subcontractors to start work without a valid COI.
- Require COIs before issuing purchase orders or notice to proceed.
✔️ Organize by Expiry:
- Sort COIs by expiration date and set automated reminders to collect renewals in advance.
✔️ Centralize Recordkeeping:
- Use cloud-based tools like Procore, GCPay, or a COI tracking spreadsheet.
- Assign a dedicated admin or risk manager to oversee COI collection and compliance.
As getbcs.com notes, failing to manage this process can leave major blind spots in your insurance protection.
Verifying Authenticity and Compliance
COIs can be falsified—or simply outdated.
To protect yourself:
- Contact the insurance agent listed on the COI to confirm the policy is valid and active.
- Request endorsements directly from the carrier for “Additional Insured” status and “Waiver of Subrogation” clauses.
- Use platforms like MyCOI or Certificial to automate verification and compliance tracking.
These steps take time—but they’re far less painful than defending yourself in court or paying for someone else’s mistake.
Handling Non-Compliant Subs
If a subcontractor cannot provide a proper COI:
- Require them to obtain coverage immediately. Some policies can be activated within 24 hours.
- Consider disqualification. If a sub refuses or delays compliance, they present a risk too great to ignore.
- Never pay a subcontractor until insurance requirements are fulfilled.
If your contract allows it, you may purchase “contingent” insurance on their behalf and deduct the cost from their pay—but always consult legal counsel before doing so.
Conclusion – No Certificate, No Work
Requiring a Certificate of Insurance from every subcontractor isn’t optional—it’s essential.
It protects your business, your project, and your client from unexpected liability. It also sends a message: You run a professional jobsite that doesn’t cut corners.
By implementing a strong COI collection and tracking system:
- You reduce risk
- You increase transparency
- And you stay protected from uninsured losses that could derail your budget—or your business
Bottom line: No COI, no site access. No exceptions.