As a business owner, it’s crucial to prevent potential liability losses and be mindful of the possibility of exposures when you’re working with various third parties including contractors, tenants, vendors, or suppliers. The question is, what should you do to make certain that you’re adequately protected?
Evaluate and Review Purchase Orders, Agreements, and Contracts
It is vital that all business relationships with third parties begin with issuing some sort of legal contract. Also, note that plenty of extra-insured endorsement forms depend on the presumption that there are contracts for safeguarding against loss or a similar incident. However, since contracts are usually overwhelmingly long, just make sure to include limits, coverage specifics, as well as the degree of extra insured status since these all relate critical insurance requirements. This means that businesses must review pertinent contracts on a regular basis to make certain that all requirements and the language are always up-to-date with governing laws, and that all insurance preconditions are in line with the specific exposure type.
Utilize a Certificate Tracking and Risk Transfer Program
The prime purpose of a certificate of insurance tracking software program is to ensure that businesses know about the third parties they’re conducting business with and potential liabilities with those third parties, like lack of coverage for instance. It also provides businesses the means to acquire, analyze, and track their certificates of insurance with those third parties. Software programs like this also provide a system for checks and balances to make certain that businesses are obtaining signed contracts and current certificates from the third parties. When the certificates have been received, they could be analyzed easily to determine if they’re compliant or not. In the case of expired or non-compliant certificates, businesses could follow up easily by using automated notices.
Track and Review Outcomes
Once the tracking software is set up, businesses could continue tracking their certificates of insurance to monitor expiration dates and ensure timely renewal. The results of the tracking software could also be used to determine compliance rates, how to resolve issues with common inconsistencies, as well as potential exposure to liabilities with high-risk third parties.
As you can see, if you are not already using risk transfer protocols into your business’ daily activities, potential liability exposure could negatively affect your financial strength, costs, and your own insurance programs. Put simply, you have to be aggressively proactive to prevent liability exposure instead of waiting for it to just occur out of the blue.