Subcontractor Risk
A certificate of insurance is not a risk transfer program
Certificates are evidence. The position is created in the agreement, the exhibit and the endorsement.
Collecting certificates satisfies an administrative requirement. It does not establish the contractual position a roofing contractor needs when a subcontractor's work causes a loss.
Key takeaways
- A certificate records what a policy looked like on the day it was issued and grants no rights against the insurer.
- Risk transfer is built in the agreement, the insurance exhibit, the endorsements and the verification process.
- Gaps surface twice: at workers' compensation audit and at claim tender.
- A defensible standard can be simple — one template, one exhibit, one verification step, one accountable person.
Most roofing contractors collect certificates of insurance from their subcontractors. Far fewer can produce the signed agreement, the endorsement and the verification that make those certificates meaningful.
A certificate is evidence, not coverage. It records what a policy looked like on the day it was issued and grants no rights against the insurer.
Where the position is actually created
Risk transfer is built in four places, and a certificate is the last of them.
- A written subcontractor agreement with indemnity language enforceable in the states you work in
- An insurance requirements exhibit that specifies limits, additional insured status and required wording
- Endorsements on the subcontractor's policy — additional insured, primary and noncontributory, waiver of subrogation
- Verification and tracking that keeps all of the above current for the duration of the work
How the gap surfaces
It surfaces twice. At workers' compensation audit, uninsured or improperly documented subcontractors are charged back as payroll. At claim, a tender to the subcontractor's carrier is denied because the required endorsement was never issued.
Both outcomes are expensive, and both are decided long before anyone reads the policy.
The question is not whether you collect certificates. It is what happens when you tender a claim.
A workable standard
The standard does not need to be elaborate to be defensible. One agreement template, one insurance requirements exhibit, one verification step before a crew is released to a job, and one person accountable for tracking.
Underwriters respond to that discipline, and so does the account's loss experience.
About the author
Wyatt Duncan
Roofers Specialty, a practice of The Duncan Group
Wyatt Duncan leads Roofers Specialty, the roofing contractor practice of The Duncan Group, an independent insurance brokerage and commercial risk consulting organization headquartered in Austin, Texas.