Client Insurance & Certificates of Insurance

Most PEOs include in their customer service agreement a clause requiring the client company to maintain GL insurance and to provide the PEO with a certificate of insurance. In addition, many PEOs also require the client to name the PEO as an additional insured. These are basic steps towards safeguarding the PEO against the risk of litigation arising out of the client's business operations.

But - PEOs cannot become complacent. It is absolutely essential that PEOs have in place a process to monitor and verify that the customer has actually provided the certificate of insurance, that the customer has renewed coverage with no lapses and that any required additional insured endorsement is in place. Too many PEOs treat this as a one-time task, to be worried about only at the time the client is signed on.

If you want to sleep at night, you must establish a smooth, well functioning business process that provides for verification and monitoring. Once the lawsuit is filed, it is too late.

In addition, PEOs must evaluate the insurance requirements for each client individually based on the nature of the client's business operations and their risk posture. For some clients, $500,000 in GL will be adequate. For others, ten times that much will not be enough. PEO management must set the insurance requirements for each client based on a review of that client.