The Real Cost of a Lapsed Vendor Insurance Policy

A lapse rarely announces itself. A vendor's policy quietly expires, the vendor keeps working, an incident happens, and only then does anyone check the certificate. By then the vendor's coverage isn't there to respond — so the injured party looks to whoever hired them.

Documented examples include a facilities manager who discovered a contractor's general liability had lapsed three months earlier, after an on-site injury — a claim reported around $2.3 million. In another, a property manager's out-of-date spreadsheet left an owner facing potential six-figure liability from a single missed certificate.

The failure mode is always the same: nothing was watching the expiration date. Spreadsheets don't send reminders, and busy teams don't re-check certificates that already looked fine. The fix isn't more diligence — it's automation that flags an expiration before it becomes an incident.