Verifying Vendor Insurance

Started by RoseM9 • 21 replies • 483 views

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RoseM9 (Texas)
Posts: 22

Posted:

Good morning,

Is it common practice to call the insurance company on a vendor's COI to confirm the coverage? I'm a newer property manager, so we are still learning best practices and industry standards.

I recently ran into a doctored COI, so I'm curious what the common approach is.

Thank you.

MaxB4
Posts: 3,513

Posted:

I never have. I look at a lot of COI's and you're looking for specific information in regards to coverage. I handle over 500 COI's for all association and would be spending weeks verifying and then start the process all over again on renewals. I haven't had to file a claim against any vendor in over 13 years. That's a bonus.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I just make sure it is on their business card, contract, or receipt they are licenced and insured. Something that if had to go to court proves they represent themselves as insured, licenced, or bondable. Plus never trust a BBB stamp. Verify they are BBB members.

Former HOA President

RoseM9 (Texas)
Posts: 22

Posted:

Thanks Max.

That's about what I figured. I look at the expiration dates, coverage limits, and so forth, and keep them on file.

I was concerned if we (management) were potentially at fault/liable for not calling the insurance carriers for vendors when we receive them.

It's been forged for years it turns out..

Thank you for sharing your experience.

JackJ9 (New York)
Posts: 112

Posted:

Quote:

Posted By RoseM9 on 07/15/2021 8:58 AM
Good morning,

Is it common practice to call the insurance company on a vendor's COI to confirm the coverage? I'm a newer property manager, so we are still learning best practices and industry standards.

I recently ran into a doctored COI, so I'm curious what the common approach is.

Thank you.

Our property manager requires that vendors provide copies of insurance, licensing, bonding, and a W-9, but our property manager doesn't make any calls to verify that the documents are authentic.

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By MelissaP1 on 07/15/2021 9:22 AM
I just make sure it is on their business card, contract, or receipt they are licenced and insured. Something that if had to go to court proves they represent themselves as insured, licenced, or bondable. Plus never trust a BBB stamp. Verify they are BBB members.

The business card was printed 5 years ago. The contractor ID I can look up, but how do I know the insurance is up to date?

RoseM9 (Texas)
Posts: 22

Posted:

Thank you everyone, I appreciate all the replies.

Rose

CarissaM
Posts: 119

Posted:

This answer is just vendor verification in general and choruses those before me. I do not include verification of insurance as part of my vendor verification process. We have about 30 subconsultants required to carry General Liability, Work Comp and some Errors and Omissions. In some cases I would be checking three agencies to confirm one COI.

However, if you only have two or three vendors, I can see how you might prefer a more stringent verification process.

ND (PA)
Posts: 792

Posted:

Quote:

Posted By MaxB4 on 07/15/2021 9:58 AM

The business card was printed 5 years ago. The contractor ID I can look up, but how do I know the insurance is up to date?

How do you know the insurance is up to date by looking at a copy of a COI?

MaxB4
Posts: 3,513

Posted:

It has a policy start and end date, same as an HOA's.

ND (PA)
Posts: 792

Posted:

Quote:

Posted By MaxB4 on 07/15/2021 7:32 PM
It has a policy start and end date, same as an HOA's.

You mean the start and end dates that anyone with the most basic forgery skills can change to whatever they want?

A COI with forged information does not help you to know that insurance is up to date, appropriate, or sufficient. Looking at what appears to be a legitimate COI just gives you a slightly more comfortable feeling than seeing "insured" written on their business card.

In the end, unless you do some sort of verification, you actually know very little about vendor's insurance (or lack of insurance) situation.

IMO . . . Trust, but verify.

If MC is not contracted and is unwilling to perform some level of verification, then a Board Member should do that job. For a typical Board, it wouldn't be a significant effort. You'd only need to do it for whichever vendors are selected for a handful of contracts each year.

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By ND on 07/15/2021 8:03 PM

Posted By MaxB4 on 07/15/2021 7:32 PM
It has a policy start and end date, same as an HOA's.

WOW!

In 13 years I have had zero issues, ZERO. Sounds like a couple of you guys have had issues, maybe? or maybe not.

ND (PA)
Posts: 792

Posted:

13 years and no issues is fantastic! Congrats. I’ve had no issues either. However, for me; if/when an issue does arise, I feel confident that having done some level of insurance verification would make me feel much more comfortable than if I had done none.

Do what works for you, your HOA, and your company. I was proposing a different approach.

Personally, I feel it is part of a board member’s fiduciary duty to verify appropriate and adequate insurance coverage. If the MC does that, great. If not, then I feel the Board should do that task. When an issue occurs (and it will eventually to some Board/HOA somewhere at some time), being able to say and show that insurance had been verified could go a long way.

PatJ1 (North Carolina)
Posts: 568

Posted:

I have been working in a small business environment for over 40 years and have never verified the Insurance ACORD received for a vendor. I do understand the concern since documents are so easily changed with today's technology. We do require that we receive the ACORD directly from the Insurance Agency noting the correct information as the Loss Payee.

Although you can never be too careful, so many things can happen in the weeks or months, or even days following the receipt of an Insurance ACORD it may be impossible to cover all the "what if's".

CarissaM
Posts: 119

Posted:

Quote:

Posted By PatJ1 on 07/16/2021 5:16 AM
I have been working in a small business environment for over 40 years and have never verified the Insurance ACORD received for a vendor. I do understand the concern since documents are so easily changed with today's technology. We do require that we receive the ACORD directly from the Insurance Agency noting the correct information as the Loss Payee.

Although you can never be too careful, so many things can happen in the weeks or months, or even days following the receipt of an Insurance ACORD it may be impossible to cover all the "what if's".

Excellent way to checkback PatJ. Most of my cert's come from the agent, but hadn't considered the OP's method for obtaining. They could definitely add this requirement as part of the verification process to ensure they're valid.

SheliaH (Indiana)
Posts: 6,964

Posted:

Some vendors, such as plumbers, may be required by the city of county to be licensed and bonded. If you're considering but in anyone, you could have contact the appropriate agency and verify that information.

Note the effective dates and coverage and if you have questions, you can contact the company for verification. If the company 's information doesn't match what the vendor said, think twice about hiring him or her. Some of that information is available onlibe, so that should save time.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By ND on 07/16/2021 5:04 AM
13 years and no issues is fantastic! Congrats. I’ve had no issues either. However, for me; if/when an issue does arise, I feel confident that having done some level of insurance verification would make me feel much more comfortable than if I had done none.

Do what works for you, your HOA, and your company. I was proposing a different approach.

Personally, I feel it is part of a board member’s fiduciary duty to verify appropriate and adequate insurance coverage. If the MC does that, great. If not, then I feel the Board should do that task. When an issue occurs (and it will eventually to some Board/HOA somewhere at some time), being able to say and show that insurance had been verified could go a long way.

I feel my company has put in the right procedures to verify insurance. It is a hell of a lot more than many companies in this business do, I know because I previously worked for them. With an Accord COI, I have the insurance broker, their license number, the insured insurance company(s) policy #, NAIC#, phone #, fax #, effective and expiration date of policy, limits, etc. Who's to say when verifying one of these COI's, that it's not a fake office, fake receptionist, fake broker? As I said, I have never come across an issue, nor heard of one.

No, if I were to question someone, it might be a former board president who makes this kind of statement "I just make sure it is on their business card, contract, or receipt they are licenced and insured. Something that if had to go to court proves they represent themselves as insured, licenced, or bondable."

MaxB4
Posts: 3,513

Posted:

I might add. I have to provide a COI to my landlord on the office space I lease. I also have to provide one to the copier lessor company for my leased copier.

A homeowner has to provide to their servicing company a COI of the master insurance policy for the unit insured by the HOA. Do you think the servicer checks all those COI's? I worked for Countrywide and I can tell you they didn't.

JackJ9 (New York)
Posts: 112

Posted:

A quality vendor is not going to fail to carry insurance AND provide fake insurance documents to try to prove that they carry insurance.

What do I mean by "quality vendor"? One who has a reputation in the community for good quality work, that has good reviews on Yelp/Google/etc. One that lives locally.

And if they do produce a fraduluent insurance document, and someone is injured, I guess that is where the association's insurance policy comes in, right? There is only so much one can do.

As a volunteer board member, I do not have time to call vendor's insurance company to verify that the documents they submitted are not fradulent.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

A quality vendor is one you can verify and prove they have insurance/license/bonded. I know of lots of "good reputable" people who can do the work. However, I would not hire a single one of them if they did not have insurance.

No the HOA's insurance is NOT going to pick up where the vendor's leaves off/non-existent. The HOA has a deductible to pay before insurance pays a dime. Guess what? A HOA's deductible is not a small amount. Ours was 20K. Do you have enough money in your HOA's budget to pay the insurance deductible be it even 5K tomorrow?

Example: I am an Electrician. Degreed and experienced. However, if the HOA hired me to do work or even if I "volunteered" I am huge liability without insurance/license. Which I do not have. If I were to replace a light fixture that burns down the clubhouse. Do you think the HOA's insurance pays for that? If so, then why require vendor's to have insurance at all?

If that clubhouse burnt down because of bad work the Electrician did, then the expense of the repairs are on the Electrician. They have no insurance then the HOA were to pay for it? They would have to go after the Electrician for the money.

It is not like having a car accident and one party doesn't have insurance. Everyone having insurance resolves that.

Former HOA President

MaxB4
Posts: 3,513

Posted:

This goes to the video Melissa started on another thread; https://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/307638/view/topic/Default.aspx

I happened to have watched the video, and then I remember what someone said, While reading the latter thread, I was thinking about the consequences of a forged insurance certificate. What happens when a HOA/COA attempts to make a claim due to unsatisfactory vendor service, and the vendor's claimed insurance does not actually exist? . The attorney stated Florida has a new requirement that Board members must have a Board Certification class or sign an affidavit that they have read and fully understand their association's governing documents. What if, the board members didn't take a class and signed a false affidavit and THEN a building collapses? What verification went into that affidavit?

LetA (Nevada)
Posts: 2,679

Posted:

You may find what you're looking for with your state's contractors licensing board. Nevada for example the SLB monitors all contractors licensing, bonds and insurance.

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