You have unpaid electric bills, you get a disconnection notice on your mailbox. Neglect your online subscriptions, and they’ll send you an email telling you that your subscriptions are canned. Isn’t it natural to be notified when a service you’re using get cancelled?
You’d think so, right? But the answer, unfortunately, is no. In reality, it’s more of a professional courtesy than anything else, but too many green compliance officers tend to think this way anyway when it comes to insurance policies lapsing. They don’t keep notes of policy expiration dates and instead wait for a cancellation notice to arrive, assuming that it’ll come before or a few days after the date of cancellation. They think they have enough time to make sure that an Insured has a new/renewed policy coverage, or at least sufficient leeway to hedge their risks in the event that they do not.
3 Reasons Why You Shouldn’t Wait for a Cancellation Notice
As such, they find out the hard way that policy cancellation notices don’t come often enough, if they manage to come at all. The thing is even if your company’s name is listed as an additional insured on the policy, Insurers or their agents do not have a natural reason to send a cancellation notice before or after the policy lapses.
First, the agent or the Insurer is not responsible for informing COI holders that a policy about to expire or gets cancelled. The only entity an Insurer is required to notify, really, is the Named Insured. Even agents don’t need to notify the latter because the policy’s notification requirements only apply to both the Insurer and the Named Insured. If they won’t do it for the primary party to the policy, the chances that they’re going to do it for Additional Insured is next to nothing.
Next, the policy doesn’t require agents or Insurers to notify COI holders about cancellations, or anything for that matter. There are no penalties, no best practices when it comes to keeping you in the loop. There is literally no impetus for anybody to give you a cancellation notice, since the policy itself isn’t concerned whether or not you’re handed one or not.
Finally, the Insurer has no obligation to notify COI holders about cancellations. This is practically a restatement of the first point, but it bears repeating. It’s also worth mentioning that when an Insurer notifies one COI holder, they actually expand their “duty of care” and must notify every single COI holder – not only the ones that make requests – from each account, all the time. That’s additional work and an extra layer of risk not many Insurers are keen on taking.
A Hopeless Case
That being said, relying on just cancellation notices when tracking the status of your policies can have disastrous consequences for your firm. First of all, A COI with a lapsed policy can protect you no better than fish wrap can. Next, your own company may even be in breach of contract requirements and you’d be none the wiser. Next thing you know, you’re meting out payment obligations because the counter-party you hired wasn’t really insured when you did.
But granted that Insurers and agents won’t help you with cancellation policies, what can you do to minimize your company’s risks? The only option available to you is to be diligent in requesting cancellations notices, even if the chances that one will come are next to nothing.
COI TRACKER Keeps You In-The-Know
But as with everything on your job description, that’s easier said than done. If you’re working with multiple vendors at once, then this one task can easily take hours in the double digits to do. COI Tracker can make your life easier here, too! By automatically sending a pre-emptive email to your vendors’ insurance agents each quarter, you’ll always be aware of any changes or lapses in their coverage all the time.
And COI Tracker can do a lot more than that. From automating data entry and COI collection, to intimating policy expiration dates COI is a complete compliance tracking solution that allows you to manage your risks by focusing on the things that matter more. Contact us for a free demo and get ready to revolutionize your compliance process today!