Workers Comp Certificate Verification: What to Check and Why

Workers compensation certificate verification is harder than GL verification, and not just because WC coverage is more legally complex. The ACORD 25 provides less information about WC than about any other coverage line - and what it does show is often misread. Organizations that believe they have verified a vendor's WC coverage based on a COI review are frequently working with incomplete information.

This guide covers what the ACORD 25 actually tells you about WC, what it does not tell you, and what additional steps to take when WC compliance matters.

What Workers Comp Information Appears on ACORD 25

The ACORD 25 has a Workers Compensation and Employers Liability section that shows:

• Policy number and carrier name
• Policy effective and expiration dates
• Whether WC coverage applies (a checkbox for "Y/N")
• Employers Liability limits - three separate figures: per-accident limit for bodily injury by accident, per-disease policy limit, and per-disease per-employee limit
• A "SUBR WVD" checkbox for waiver of subrogation

What it does not show: the states covered under the policy, the classification codes and payroll basis for the premium (which determine what work is actually covered), whether any workers are excluded by owner exclusion endorsements, and whether the policy covers all employees of the vendor or only some.

In other words, the ACORD 25 confirms that a WC policy exists and is current - and shows the EL limits. It does not confirm that the workers who will be performing work for you are actually covered under that policy.

Employers Liability Limits vs. WC Coverage: The Distinction

These two coverage lines exist within the same policy but cover entirely different things. This distinction is frequently confused.

Workers Compensation (Part One): WC coverage pays for a worker's medical expenses and lost wages when they are injured on the job. It is "no-fault" coverage - the worker does not have to prove the employer was negligent. The benefit amounts are set by state statute, which is why the ACORD 25 lists WC limits as "Statutory" rather than a dollar amount. The employer cannot be sued by an injured worker for these benefits - the WC system is the exclusive remedy.

Employers Liability (Part Two): EL coverage protects the employer against lawsuits by injured workers that fall outside the exclusive remedy of the WC system. This happens in specific circumstances: third-party-over actions (where an injured worker sues the employer through a third party who the employer may be liable to), consequential bodily injury claims by family members, and dual capacity cases where the employer was also acting as a product manufacturer. EL limits are shown as dollar amounts: typically $100,000 / $500,000 / $100,000, or $500,000 / $500,000 / $500,000.

When your COI requirements specify "workers compensation - statutory limits and employers liability - $500,000 / $500,000 / $500,000," you are requiring both Part One (the WC coverage itself) and Part Two (the EL limits) of the standard WC policy. These are not separate policies - they are two parts of a single NCCI-standard workers compensation policy.

Why You Cannot Fully Verify WC Coverage from a COI Alone

A certificate of insurance is a summary document. For GL, it contains enough information to do a reasonable compliance check - limits, dates, endorsements, AI status. For WC, it is closer to an acknowledgment that a policy exists. The information necessary to verify that the right workers are covered under the right classification codes simply does not fit on the ACORD 25.

The specific gaps that matter most:

Classification codes: WC policies are written by class code. A painting contractor's employees might be split across multiple codes - painters (code 5474 in most NCCI states), supervisors, and office staff. If an employee is performing a task outside their classification code - a painter acting as a temporary electrician's helper, for example - the coverage question becomes complex. The COI does not show any of this.

State schedule: A WC policy lists the states where the employer has operations and employees. An out-of-state vendor working at your location may not have your state listed on their policy. The COI does not show the state schedule.

Owner exclusions: Many WC policies for small LLCs and S-corps have corporate officer exclusion endorsements that remove the owners from WC coverage. If the vendor is a two-person operation where both owners are excluded, the policy provides WC coverage for... no one. The COI does not reflect owner exclusion endorsements.

For high-stakes situations, request an Evidence of Coverage (EOC) letter from the vendor's WC carrier - not just the ACORD 25. An EOC letter can confirm the states covered, confirm the absence of officer exclusions, and provide a direct certification from the carrier rather than a broker-issued certificate.

How to Request a WC Evidence of Coverage Document

The process is straightforward but requires knowing what to ask for:

1. Contact the vendor and request that their WC carrier issue an Evidence of Coverage letter addressed to your organization.
2. Specify in the request that the EOC should confirm: (a) the policy is active and in force as of the date of the letter, (b) the states covered under the policy include [your state], and (c) there are no officer exclusion endorsements that would exclude any individual performing work for you.
3. Request the EOC directly from the carrier's certificate department - not just from the vendor's broker. Some carriers offer online portals for this; others require a written request from the policyholder.
4. For construction projects with extended timelines, request an updated EOC at project midpoint and at the start of each renewal year.

Not every organization needs to go this far for every vendor. The EOC process is appropriate when: (a) the vendor's employees are performing high-hazard work on your premises, (b) the contract value is significant, (c) you have reason to question the vendor's compliance based on the COI review, or (d) the vendor is a sole proprietor or very small LLC.

State-Specific WC Requirements: Monopolistic State Funds

Four states operate "monopolistic" state workers compensation funds: Ohio, North Dakota, Washington, and Wyoming. In these states, private WC insurance is not permitted - all WC coverage must be purchased from the state fund.

This creates a practical verification problem. A vendor based in Ohio carries WC through the Ohio Bureau of Workers' Compensation (BWC), not through a private carrier. Their ACORD 25 will either list "Ohio BWC" as the insurer or note the state fund policy. The EL section may show as "N/A" or "Not Applicable" because the Ohio BWC does not provide Employers Liability coverage - that is a separate policy that Ohio employers need to purchase from a private carrier if they want EL protection.

For multi-state vendors operating in monopolistic states, the practical result is two separate policies:

• A state fund WC policy for the monopolistic state operations
• A private WC policy for all other states, which may include EL coverage

If you require EL coverage, confirm that the vendor has obtained a standalone EL policy for their monopolistic state operations - or adjust your requirement to reflect that EL is not available from the state fund.

Independent Contractor Exclusions: The 1099 Trap

One of the most significant WC verification risks involves vendors who use their own subcontractors. A vendor who is a licensed contractor may have WC coverage for their direct employees, but their WC policy may exclude coverage for 1099 independent contractors they bring to your site.

The risk for you: if a subcontractor the vendor treats as an independent contractor is injured at your location, and a court or the state WC board determines that person is actually an employee under the economic reality test or the ABC test (which many states use), the WC carrier may disclaim coverage. The injured worker may then pursue a tort claim against you directly.

This is the "statutory employer" doctrine that many states apply in construction: when a property owner or general contractor hires a subcontractor whose employee is injured, the owner or GC may be treated as a statutory employer and bear WC liability if the subcontractor does not have valid WC coverage.

Protection steps:

• In your vendor contract, require that all workers performing work for you - whether direct employees or subcontractors - are covered under active WC policies.
• Require that if the vendor uses subcontractors, those subcontractors carry their own WC policies and that you receive COIs from them as well.
• For any vendor who regularly uses subcontractors, require a statement in the Description of Operations that WC coverage extends to all workers on the project, including subcontractors, or that subcontractors maintain their own separate WC policies.

For construction subcontractor-specific requirements, see our detailed guide on construction subcontractor COI requirements.

NCCI vs. State Fund Carriers: How to Spot Them on a Certificate

NCCI (National Council on Compensation Insurance) is the rating bureau that develops WC class codes and experience modification rates for most states. A vendor's WC policy written through an NCCI-member carrier (State Auto, Travelers, Zurich, AmTrust, etc.) uses standardized forms and procedures. You can verify policy status through NCCI's online portal if needed.

State fund carriers are quasi-governmental entities that write WC in their state. Beyond the four monopolistic state funds, many states have a competitive state fund that competes with private carriers: California (SCIF), Colorado (Pinnacol), New York (NYSIF), Texas (Texas Mutual), etc. These are legitimate carriers, but their policy forms may differ from NCCI-standard forms, and EL limits and terms may vary.

On the COI, you will see the state fund name instead of a commercial carrier name. This is a normal finding and does not indicate a compliance problem - it indicates the vendor purchased WC from the state fund rather than the private market. The verification steps are the same; just note that EL limits may be subject to state fund-specific terms.

Certificate Holder on WC vs. GL: Different Treatment

On a GL policy, being named as a certificate holder is a minimal protection - it means notification of cancellation. Being named as an additional insured provides actual coverage. This distinction is well-understood for GL.

On a WC policy, the situation is different. WC does not have additional insured status in the same sense - there is no mechanism to name a third party as an AI on a WC policy. The protection a downstream party can obtain from a vendor's WC policy is the waiver of subrogation.

Without a waiver of subrogation on the WC policy, the vendor's WC carrier - after paying benefits to an injured worker - has the right to pursue subrogation against any third party whose negligence contributed to the injury. That third party might be you. A worker falls at your facility partly because of a hazard you created; the WC carrier pays the worker's claim and then sues you to recover what it paid.

A waiver of subrogation on the WC policy prevents this. It is indicated by the SUBR WVD checkbox on the ACORD 25. For any vendor whose employees work on your premises, require a waiver of subrogation on both the GL and WC lines.

Experience Modification Rate (EMR) and Whether to Require It

The Experience Modification Rate is a factor applied to a vendor's WC premium based on their loss history relative to other employers in the same industry. An EMR of 1.00 is average. An EMR below 1.00 indicates a better-than-average loss history. An EMR above 1.00 indicates worse-than-average losses, and a higher premium.

Some sophisticated hiring organizations - particularly in construction - require vendors to provide their current EMR as part of prequalification. A vendor with an EMR above 1.25 or 1.50 is signaling a meaningfully poor safety record. Some owners and GCs refuse to work with contractors whose EMR exceeds 1.25.

The EMR does not appear on the ACORD 25. It appears on a separate NCCI document called the Experience Rating Worksheet. To obtain it, ask the vendor to provide their current EMR letter from their WC carrier or broker. The EMR is recalculated annually and applies to the policy period, so request a current-year document.

Whether to require EMR disclosure depends on your organization's risk tolerance and the nature of the vendor's work. For vendors performing high-hazard work on your premises, an EMR requirement is a meaningful safety screening tool. For lower-hazard vendors, the administrative burden may not be justified.

What Happens When a Contractor Claims WC Exemption

WC exemptions are real and legal in many states - but they are also frequently abused. The legitimate exemptions vary by state but commonly include:

• Sole proprietors with no employees (in many states, a sole proprietor with no workers may be exempt)
• Corporate officers of closely-held corporations (in many states, a minority shareholder-officer can elect to exclude themselves)
• Members of LLCs in some states
• Agricultural workers in some states
• Domestic workers below a certain hour threshold

When a vendor claims a WC exemption, your compliance process should:

1. Verify the exemption is valid for the vendor's state and entity type. Ask for the state-issued exemption certificate, not just a verbal claim. Most states that allow WC exemptions issue a written exemption certificate.
2. Determine whether the vendor will have any employees on your site. A sole proprietor who is truly a one-person operation presents different risk than a contractor who treats multiple workers as "subcontractors" to avoid WC obligations.
3. Assess whether the exemption was properly obtained. Some vendors file for exemptions using incomplete or incorrect information. An exemption obtained under false pretenses may not protect against WC liability in a claim scenario.
4. Consider whether the contract value and nature of work justify requiring the vendor to obtain WC coverage as a condition of the engagement - even if they are technically exempt. For any work with meaningful bodily injury risk, the cost of the WC policy is small relative to the liability exposure.

Automated Verification Workflow for WC Specifically

WC verification has specific automation challenges because so much relevant information is not on the ACORD 25. An automated parsing workflow for WC should focus on what can be reliably extracted and flagged:

• EL limits check: Extract all three EL limit fields and compare against required minimums. This is the most reliably automatable WC check.
• Policy expiration date: WC policies often renew on different dates than GL. Track WC expiration independently and alert at 60/45/30/15 days.
• Waiver of subrogation flag: Extract the SUBR WVD indicator for the WC line and flag if absent when required.
• N/A or blank WC section: Flag any certificate where the WC section is blank or marked N/A for review - these require a human decision about exemption status.
• Carrier name recognition: Flag state fund carriers for notation in the record (not as deficiencies, but for awareness in multi-state verification scenarios).

The items that require human review - exemption status verification, state schedule confirmation, owner exclusion investigation - should be explicitly queued as human tasks rather than treated as automatable. The value of automation here is in consistently flagging what needs review, not in pretending the automated check is complete when it is not.

For a broader look at how automated compliance workflows handle the full range of coverage lines, see our guide on how to build a COI compliance workflow.

Organizations dealing with high volumes of vendor COIs across coverage types will also benefit from reviewing the COI compliance best practices guide for program-level recommendations.