When was the last time you reviewed your vendor contracts or insurance certificates? If your answer is “it’s been a while,” you’re not alone—but you could also be one accident or claim away from a very expensive surprise. In today’s fast-paced business world, it’s easy to assume that once you have certificates of insurance (COIs) on file and signed vendor agreements, you’re covered. But insurance coverage, relationships, and risks change, and if your paperwork doesn’t reflect those changes, you might be the one footing the bill when something goes wrong.

Here’s why making an annual review of your insurance certificates and vendor contracts part of your business routine is one of the smartest risk management moves you can make.

1. Verify That Coverage Is Still Active and Adequate

A vendor’s insurance certificate is only as good as the coverage behind it. The coverage can lapse, change, or shrink without your knowledge. Many business owners assume that as long as they have a COI on file, they’re protected. But certificates are snapshots in time; they don’t automatically update if a vendor cancels or reduces coverage.

Example: Imagine a landscaping company you’ve worked with for years accidentally damages your property while plowing snow. You pull out their insurance certificate, only to discover it expired six months ago—and their current policy no longer includes property damage liability. Without verification, you could be left paying for the repairs yourself.

By reviewing certificates annually, you can confirm that vendors still carry the required limits and coverages. Better yet, request updated COIs each year and cross-check them against your contract requirements to ensure nothing has changed.

2. Ensure Contract Terms Match Your Risk Requirements

Even well-written contracts can become outdated as your business evolves. If you’ve expanded operations, purchased new equipment, or taken on larger projects, your insurance requirements for vendors and subcontractors may need to be updated too.

Example: Suppose you own a construction company that’s grown significantly over the last few years. Your old vendor contract may require only $1 million in general liability coverage from subcontractors. But now, you’re working on multimillion-dollar commercial jobs where that limit is far too low to protect your business from exposure. If a subcontractor’s work causes a major loss, you could end up sharing liability simply because your contract didn’t reflect your current scale of operations.

Reviewing vendor contracts annually helps ensure your insurance and indemnification language aligns with your business’s current size, services, and risks. Your Hertvik Insurance agent can help identify where updates are needed. Such as adding additional insured wording, increasing liability limits, or revising hold harmless clauses.

3. Identify Gaps Before a Claim Reveals Them

One of the most common and costly surprises in business insurance happens when two parties think a risk is covered, but neither actually holds the coverage. A simple annual review can catch these gaps before they turn into disputes or denied claims.

Example: Let’s say you hire a catering company for a large corporate event. You assume their insurance covers foodborne illness claims, but their general liability policy excludes it. When several guests fall ill and sue your company, you find out too late that the caterer’s policy doesn’t respond, and your own policy may not cover it either.

Annual reviews give you the opportunity to spot these gray areas before they cause financial damage. You can verify coverage types (like professional liability, workers’ compensation, or auto liability) and confirm that everyone involved has the protection they’re supposed to.

Don’t Let Paperwork Become a Pain Point

Certificates of insurance and vendor contracts might not seem urgent compared to the daily demands of running your business. But, neglecting them can lead to major financial and legal headaches. Set aside time once a year to review these documents with your insurance agent and legal team. This ensures your protection stays strong, your partnerships stay compliant, and your business stays secure.

If you’re unsure where to start, your Hertvik Insurance Group agent can help. Our team can review your vendor agreements and certificates of insurance. We help identify potential gaps and make sure your requirements match your current risks.

Contact your Hertvik Insurance agent today to schedule an annual review. Head into the next year confident that your coverage is as strong as your business.