General Inquiries

Certificates of Insurance and Retainage

  • 1.  Certificates of Insurance and Retainage

    Posted 27 days ago
    We are dealing with closing out a job where we are paying retainage 6-12 months after certain subs have been on the job site.  When the auditor for the GL underwriter has inspected our records in the past, they have issued deficiencies in their finding for paying a sub retainage without an enforceable COI, which has led to higher premiums.  Understandably the sub does not want to issue us a cert for a job they have not worked on in a year.  We are months away from the insurance audit, but I would like to get in front of this now. Any insight is appreciated.

    Julia Franks CPA
    The Lagasse Group
    Hopkinton MA
    (508) 686-5045

  • 2.  RE: Certificates of Insurance and Retainage

    Posted 26 days ago
    Most contracts with owners and GCs usually have a stipulation that you need to provide COIs for a period of time after project is completed to ensure you have proper insurance coverage for completed operations as well as liability. This is normally carried down to the subcontractor or sub-subcontractor level as their subcontracts tie into the same insurance requirements as we have with a owner and/or GC.

    John Jankowski CCIFP
    Sagamore Plumbing & Heating, Inc
    Hingham MA
    (781) 603-5881

  • 3.  RE: Certificates of Insurance and Retainage

    Posted 26 days ago
    I agree with John's response about COI's following the completion of the project.  I'm concerned about the additional premium you're being charged. In my experience (30 years) I've never had an auditor do what you describe.  If the policy term on the subcontractors COI covers the duration of their work on project, and they have adequate limits, their cost should be included in the subcontract class code.  There is no basis (subcontract cost) for the auditor to charge premium after the project is completed.  I suggest reopening the prior year audit.

    Bret Burton CPCU
    Surety Manager
    IMA, Inc.
    Wichita KS
    (316) 267-9221

  • 4.  RE: Certificates of Insurance and Retainage

    Posted 26 days ago
    Hi Julia,
    We are a Subcontractor and have no problem issuing a COI after we pull off the job.  It seems to me that there is a time frame after the job ends that Sub liability continues anyway, but that is a question you could ask your insurance agent.

    If you are requiring your Sub have waiver of subrogation and/or naming certain parties additional insured, there is likely an additional charge they are incurring and it is entirely possible that they do not want to incur this expense when their job is complete.  Finding a solution to that may just get you your certificate.

    Good luck!

    Lucrezia Esteban
    East Muskegon Roofing and Sheet Metal Co., Inc.
    Muskegon MI
    (231) 744-2461

  • 5.  RE: Certificates of Insurance and Retainage

    Posted 25 days ago
    As a subcontractor the problem I have is when the GC wants us to supply a COI with additional insured and Waiver of Subrogation for 3 yrs following their substantial completion (which is actually a year after we completely finished our portion of the project).  We would/have provided them with our regular COI but I don't feel we should have to pay for the extra additional insured fees for 4 years after we have completed our work and besides there were several electrical subcontractors that were on the project after our work was completed.  It also took over a year to get the final payment.  This was 3 years ago and they still keep sending me a notice saying that were not in compliance.

    Judy Miller
    Delafield WI
    (262) 646-8087

  • 6.  RE: Certificates of Insurance and Retainage

    Posted 23 days ago
    Let me begin by saying whenever you have a commercial construction contract with risk transfer, it should be the goal to negotiate and balance interests between the parties.

    This being said, each state has specific construction anti-indemnity laws and right of repose for commercial construction claims. The reason the insurance auditor is asking for an enforceable COI is because they want to confirm a policy is in force from the sub that complies with indemnification agreements, insurance specifications, additional insureds and waivers of subrogation, per the contract. Based on how indemnity language, length of required completed operation coverage required and state repose laws, the requirement for subcontractor COI will vary. The delivery method of GC, CM Agency, CM at Risk or Design/Build will also impact what is required.

    An example would be a construction contract that requires a sub to carry insurance for 3 years after completion of construction for actions arising out of defective or unsafe improvement to real property. Michigan has a 6 year right of repose with 10 year for gross negligence. In this scenario a sub would need to provide a valid COI for three years to the contractor.

    I have attached some information for your reference.

    Hope this helps..

    Jerry Whitaker BA Marketing
    Senior Partner
    Acrisure / Whitaker LaChance
    Portage MI
    (269) 585-7098