Why is it necessary for contractors to provide their own certificate of insurance if they are enrolled into a wrap-up? – Linda, Atlanta, GA

First, it should be noted that being enrolled in a wrap-up does not mean that all of a contractor’s potential exposures are covered.  The exposures not covered by a wrap-up may include automobile liability, pollution liability, professional liability, or property and almost always includes Workers’ Compensation and General Liability exposures away from the project site because the wrap-up coverage is specific to the defined site.  The contractor must provide evidence that these exposures are covered through their own risk transfer methods. Also, presenting a certificate of insurance identifying these coverages provides the wrap-up sponsor evidence of the contractors insurability, peace of mind that coverage exists should the contractor incur a claim outside the project site and/or wrap-up coverages, and additional protection by means of required endorsements such as Additional Insured status or Waiver of Subrogation language.

What happens if, in an attempt to lower their insurance credit, a contractor underestimate their payroll? – Matthew, Chicago, IL

Matthew, excellent question!  From time to time, we do see contractors underestimating their payroll estimates in attempt to lower their initial insurance credit deduct. With our historical data from previous projects, we are able to predict an accurate payroll estimate based on their type of work, workers’ compensation classification, and the state that they will be working.  Once we can predict an accurate payroll estimate, we will revise their insurance calculation and request for signature to ensure that a fair and accurate credit is agreed upon. If it is a deduct program (and not in New York), it is important for the contractor to provide an accurate payroll estimate, so they are not responsible for a large additional wrap-up deduct at the end of their work.