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| Risk Management |
| Risk Engineering: Keeping Risk Where it Belongs |
Picture the opportunities for risk: An employee of the janitorial service that cleans your building at night is injured on the job.
A company that assembles a component of a valve your company manufactures provides you with defective material which is not discovered until after the valve fails following installation.
A piece of leased machinery malfunctions and shuts down operation of your entire warehouse.
Any business relationship exposes your company to risks. That is the nature of business, and it is why wise owners maintain sufficient liability insurance coverage to protect their businesses. But another vital aspect of risk management can be easily overlooked. If, for example, you hire independent contractors, depend on leased machinery, or lease properties to other tenants, you may expose your company to losses caused by someone not directly employed by you.
Two common business practices--obtaining certificates of insurance, and obtaining additional insurance status--are the best methods of keeping the risk where it belongs. Mail a form letter to all independent contractors, suppliers, service providers, and tenants that requests:
- additional insured status in their general liability policy
- a certificate of insurance showing their status as well as policy dates, coverage and limits of coverage.
You will need to log and confirm all responses to your written requests.
Certificates of Insurance:A certificate of insurance confirms that the independent contractor, tenant, or supplier of goods or services has an insurance policy in force, and for what period of time.
Additional Insured Status:Obtaining “Additional Insured Status” means that your company’s general liability policy, and the other party’s insurance company will handle claims against your company which result from losses incurred by the other party’s negligence.
Source: Kemper “Safety Watch” Vol. 3
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