| If you think insurance is a business decision best | | | | Once you've determined that it's appropriate to |
| made by the company's owner, you're right--to a | | | | require your supplier to have specific coverage, there |
| point. But when that company is your supplier, you | | | | are a number of ways to make sure what you ask |
| just might want to have some input into what type | | | | for is actually in force. One is a certificate of |
| of coverage they have. | | | | insurance, which is a document that typically |
| Generally, when it comes to your suppliers, you'll be | | | | describes the type of coverage a company has. |
| concerned with their property insurance (which | | | | What is actually included on a certificate of insurance |
| covers your interest in tangible property) and liability | | | | can vary by state and carrier. For the most part, all a |
| coverage (which protects you in case of a lawsuit). | | | | certificate does is state the coverage that was in |
| You can use your position as a customer to insist | | | | force when the certificate was issued, and does not |
| that your suppliers provide you with additional peace | | | | give you any assurance that the coverage will |
| of mind through certain types of insurance coverage. | | | | continue in the future, or that the policy will actually |
| When you are in business, consider the other party's | | | | pay a claim to your benefit. |
| insurance as additional protection for your company. | | | | However, in many cases, your situation will be such |
| Who buys the insurance is a matter of bargaining | | | | that it's appropriate to accept a certificate of |
| power, custom and practicality. | | | | insurance. Examine the document for genuineness. It |
| For example, if you buy components from a variety | | | | will usually be on a form; check for current dates, a |
| of different sources to create your product, you | | | | signature, the policy number, duration and limits. Do |
| may want to insist as part of your purchase terms | | | | you recognize the carrier? Is there any limiting |
| that your suppliers carry liability coverage to protect | | | | language that might be constricting? Can you verify |
| you should a claim be made based on a product | | | | the information? |
| failure due to a specific component. Or if, regardless | | | | A safer approach than certificates is to ask your |
| of what you're buying, your period of exposure to | | | | vendors to name you as an additional insured on their |
| potential liability or property damage is of limited | | | | policy. In this case, you not only get the benefits of |
| duration, perhaps because your business is seasonal | | | | the policy, but you'll be notified if the policy is |
| or event-driven, it may be more practical and | | | | canceled for any reason. The cost to name someone |
| customary for the supplier to provide the coverage | | | | as an additional insured is nominal and sometimes |
| than for you to do so. | | | | even free. |