Welcome to the podcast Risk Intelligence with your host, Karen Adams-Mom. She will be sharing her knowledge on common insurance questions, coverage explanations, claims scenarios, and interviews with brokers, clients, and colleagues to discuss various topics in the insurance industry. Hi everyone, welcome to another edition of my podcast called Risk Intelligence. With these podcasts, what I like to do is mix it up.
Sometimes I explain coverages, sometimes I give examples, sometimes I like to tell stories about a situation and how the coverages apply and such. And I think stories go a long way because people, when they listen to the stories, it's more meaningful for them. They can understand it better. So with that, what I'd like to do is start out with the story.
So imagine you're a business owner and you've spent 10 years building your company. Late nights, sacrifices, the winds, only to watch it unravel from a single incident that you never even saw coming. One small operations firm had everything going for it. Loyal clients, steady revenue, a solid reputation, then a routine workplace injury hit.
It seemed manageable at first, but then the legal costs, the downtime, and the operational disruptions started stocking up. And the owner just could not keep up with it. So this case, it all started with a subcontractor. A crew member from a partner company damaged the client's property during a joint project.
Everybody assumed that the subcontractor's insurance would handle it. But the contract language was vague and the contract language was not reviewed with the actual policies to make sure that everything was in place. Don't look at the certificate. The certificate of insurance doesn't do you anything.
All the certificate is, is a one-pager that has, yes, I have insurance and these are my limits. It doesn't tell you the fine print. So you have to look at the policies. Who does that?
Well, it could be your insurance agent. It could be your attorney, somebody who has some insurance knowledge. But the policies need to match the contract language. So in this situation, that did not happen.
And everybody was pointing fingers at each other saying your insurance is going to take care of it. Your insurance is going to take care of it. And it didn't happen. So the cash flow tightened, the contract stalled.
And when the owner realized the real problem wasn't the incident, it was their insurance program that wasn't actually structured around the true exposure. Meaning the owner signed a contract with the subcontractor. And the subcontractor was supposed to have X, Y, and Z insurance coverages in the event that he was negligent for that job. Well, guess what?
The contract was signed. A certificate was given. But the policies were not reviewed. And the owner is thinking that the subcontractor has all the coverages, but he doesn't.
So now it happens. Now the owner is responsible for this damage. Again, legal fees, downtime, contract stalled, and the rest is history. I mean, I think you know where I'm going with that.
So the point of the story is, is that whenever you sign a contract, no matter how big or how small it is, you need to have the contract reviewed and compared to the actual policies. Don't worry about the certificate. The certificate is meaningless. Like I said, it's a one-page or saying, yes, I have insurance and I have these limits.
But it's the policy that really defines what the coverages are that you have. I hope that information was helpful. Thanks for listening. By doing a search on Karen Adams-Vaugh.