In a discussion at the IACCM Web site I came across a real-world story (it’s reply #4) how a company’s inability to find a contractor’s insurance certificate ended up costing the company significant money.
The contractor was a painting company. Its employee was hit by a board falling off a scaffold. Eventually he sued the company (among others). The painting contractor was supposed to indemnify the company against its employees’ claims, but the indemnity was basically worthless: apart from a truck, the painting contractor had essentially no assets that could be seized to satisfy the indemnity obligation.
The company had obtained an insurance certificate from the painting contractor. But that had been several years earlier. By the time the lawsuit came around, the company couldn’t find the insurance certificate. Complicating matters, the painting contractor denied ever having had insurance.
End result: The company ended up paying “a significant amount” to settle the painting contractor employee’s claim. If the company had been able to find the painting contractor’s insurance certificate, it might not have had to pay anything.
(See also Insurance provision notes.)