Workers Comp Audit Stress Reducer
Use It For Your Next Premium Audit

Certificate of Insurance Fraud – Sub vs. Employee


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.


pic firefighters certificate of insurance fraud ladder of insurance
Peter Stehlik, Attribution, via Wikimedia Commons

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





James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications


Get the latest workers' comp news FREE!

This field is for validation purposes and should be left unchanged.