Certificate of Insurance Fraud More Prevalent Due To Small Biz Expansion
Many articles on fraud have appeared in the Workers Comp blogosphere over the last two decades. Since the small business expansion of 2021 and 2022 certificate of insurance fraud has spiked recently. Forewarned is forearmed
We received an email this morning from a California business where it had been assessed a massive amount of additional premium during its annual premium audit. A subcontractor had given the owner a certificate of insurance on a policy that had been canceled just after the policy had been issued by the carrier for non-payment of premium. The subcontractor was on a pay-by-month program.
If one wants to see how to avoid this situation, check out this article on taking a few minutes to avoid certificate problems. One phone call by the business owner or employee who handles the insurance would have avoided a major problem. Cert verification is worth at least $600 an hour to the business to avoid cert fraud.
We receive calls almost weekly now from a company searching for coverage through a ghost policy. Almost all states have clamped down on this practice.
Ladder of Insurance* = Pay The Premium
The court system will not usually function as a savior after a premium auditor has performed a 10-minute task of verifying that the certificate was invalid. The Ladder of Insurance will prevail in most instances if a claim is filed by the subcontractor or one of their subs or employees.
Certificate of insurance fraud remains a concern for agents, contractors, and premium audit departments. Avoiding the premium auditor as the one that discovers invalid workers comp certificates is the goal. Do the work and verify any that your company receives from any sole proprietor or company.

Ladder of Insurance – copyright J&L Insurance Consultants, Inc.