How to track subcontractor insurance: four ways compared

The five jobs any method has to do

Check each method against the five jobs below. A method that skips one leaves that job to somebody’s memory.

1. 01

   Collect

   Ask for the certificate of insurance (COI) and the endorsement pages before a subcontractor starts, and again at every renewal. Send the same written request each time, and give one address or upload link for the reply. Our request email templates have a first request and a renewal reminder to copy.
2. 02

   Verify

   Compare what arrives with what the subcontract requires: the insured’s name, each limit, each policy’s dates and each endorsement. Use the same checklist every time. How to verify a certificate of insurance goes through it.
3. 03

   Track

   Keep one current record with a status for every subcontractor. A certificate gives a start and an end date for each policy on it. The end dates are not always the same day, so record each one. Ask for the renewal about 30 days before a policy ends, and again closer to the date.
4. 04

   Enforce

   Accounts payable looks at the status before a payment run, and the project manager before a start date. This job is easy to skip, and without it the record changes nothing. Whether you may hold a payment depends on your subcontract and your state’s prompt payment law. New York’s, for example, lists the grounds on which a contractor may withhold from a subcontractor under the private construction contracts it covers. It also requires written notice of the withholding. Ask your construction attorney before you make holding payment a rule.
5. 05

   Document

   Keep every certificate and endorsement you were sent, including the ones a renewal has replaced. An occurrence policy responds to injury or damage that happened during its policy period, even when the claim is made after the policy has ended. So a later claim can fall to an earlier year’s policy, and that year’s certificate is the one you will want. A workers’ compensation premium auditor may ask too. A 2013 order of Tennessee’s Department of Commerce and Insurance quotes a rule of the National Council on Compensation Insurance (NCCI). Under that rule, the contractor must furnish satisfactory evidence that a subcontractor had workers’ compensation insurance in force for the work. A certificate of insurance is one of the documents that may be used. Rules differ by state, so ask your broker or carrier what its auditor wants.

The four ways side by side

A spreadsheet

Use one row per subcontractor, with columns for company, trade, contact, insurer, policy number, end date, each limit, and each endorsement the certificate states. Our free tracking spreadsheet has these columns, with an expiration date for each policy. If you build your own, give each policy its own end date column. Add a status column with a fixed set of words, such as Compliant, Needs review, Expiring soon, Non-compliant and No certificate.

Color the date columns so that dates coming up soon stand out. In Excel that is Conditional Formatting, then Highlight Cells Rules, then A Date Occurring. A color only helps the person who opens the file. Nothing is sent.

A sheet has two weak points. It stores what someone typed, so a mistyped date stays wrong until a person catches it. And a Yes under an endorsement records that a box was marked on the certificate, not that the endorsement page is on file. Keep a separate column for whether the page is on file.

To test a sheet you already have, run it through the free spreadsheet check. It reads the sheet against a standard set of subcontractor requirements and needs no account.

Insurance fields in the accounting system

Some accounting systems give each vendor a place for insurance. What it holds differs by product and edition, so read the help page for the one you run. Three examples, from the makers’ own help pages:

• Sage 50 tracks four types of insurance for a vendor: workers’ compensation, general liability, umbrella and automobile. Each has an expiration date, insurer name and policy number. You can also add a note. Sage’s help says some features may not be in every product.
• Sage 100 Contractor tracks expiration dates for workers’ compensation and liability insurance certificates, by vendor or by job. Its help says you can choose to be warned when you create a subcontract for a vendor whose certificate has expired. It also says you can stop payment to a vendor whose certificate has expired.
• Procore is construction project management software, not an accounting system. It has an insurance tab on each company in its directory. The tab holds type, policy number, limit, dates and attachments, with an option to email a notice when a policy is about to expire.

The strength of these fields is where the date sits: beside the payment, so the enforce job can happen without anyone remembering it. Their weakness is what they hold. The three help pages describe fields a person fills in, such as dates, policy numbers, notes and a status. None describes comparing a limit with your subcontract or reading an endorsement page, so the verify job still happens somewhere else.

A shared folder with calendar reminders

One folder per subcontractor holds the certificate and endorsement files. A calendar entry ahead of each policy’s end date tells someone to ask for the renewal. This needs no new tool, and it does the document job well as long as old files are kept and not overwritten.

The method has no list. To learn who is not compliant today, somebody opens every folder. A reminder in one person’s calendar goes unseen when that person is out. Each renewal means a new entry, made by hand, for a date read by eye. Use the folder as the filing cabinet behind a spreadsheet, not as the tracker.

Dedicated software

Certificate tracking software is built to keep the request, the comparison with your requirements, the reminders and the history in one place. Products differ, so ask each vendor four things:

• Who reads the certificate: the software, their staff or yours.
• Whether endorsement pages are checked, or only the certificate.
• How a subcontractor or agent sends a document.
• How the price is set.

One example is ours. WatchMyCover holds your requirements and compares each limit, endorsement and date on a certificate with them. It gives the reason for each verdict, and emails subcontractors before a policy ends once you switch that on. It works from the certificate and the endorsement pages you upload, so it does not confirm that a policy is in force. For prices, see what COI tracking software costs.

When a spreadsheet is enough

A spreadsheet does the track job well when all three of these are true:

• The list is short enough that one person can read every row in one sitting.
• One named person owns the sheet, there is one copy of it, and a second person can run the routine when the owner is out.
• It is opened on the same day every week, whether or not anything seems due.

The weekly routine, in order:

• Request a renewal for every policy ending in the next 30 days.
• Follow up on every open shortfall, and escalate what is past its deadline.
• Check that each subcontractor due to start next week is compliant.
• Give accounts payable the current list before the payment run.
• Write down any exception: who approved it, why, and until when.

Signs a spreadsheet is no longer enough

• A policy ended and you learned of it from an invoice, an incident or an audit.
• There are two versions of the sheet, or two people each keep their own.
• The owner was away and nothing was requested that week.
• You cannot tell from a row whether the endorsement page is on file.
• Requirements differ by trade, and the sheet does not show which row is short of what.
• A renewal overwrote last year’s row, so the history is gone.

One sign is a reason to repair the routine. Several are a reason to move up one step at a time: first reminders that send themselves, then software.

Three numbers to watch each month

Whatever the method, count the same three things on the same day each month.

1. The share of active subcontractors that are compliant today.
2. How many worked on site or were paid while not compliant. The target is zero.
3. The average number of days from the first request to compliant for a new subcontractor.

Write them in one place so the direction shows. If your method cannot produce them in a few minutes, treat that as one more of the signs above.