As a practicing insurance broker and risk manager I have seen my share of contractual risk transfers that belong in the category of "are you kidding me ?". Using a contract to transfer risk to others is a solid technique of protection for owners and their stakeholders. Lately, I have seen contract demands that are absolutely untenable for anyone to deal with.
Here are my top 5 "are you kidding me ?” contract risk transfer demands:
1) A Township wanted my contractor client to indemnify and hold harmless the Township and everyone employed in the township for 50 years following the completion of a sewer job- "are you kidding me?”
2) A large national window manufacturer contractually required my wholesale/retail client, who is a vendor, to have insurance limits 10 times greater than what the manufacturer carried- "are you kidding me?”
3) A General Contractor contractually required all their subs to pay for claims arising out of their sole negligence, even though the State law did not allow it. The contract went on to say that if the State negates this portion of the contract, the sub would still have to make them whole - "are you kidding me?”
4) A City required my general contractor client to indemnify them for claims that are excluded under insurance policies, even if the coverage is not available in the marketplace - "are you kidding me?”
5) A large banquet facility required my client who is a vendor to agree by contract that all risk transfers specific to their contract apply to all hired subs even though the subs are not signatories to the contract -"are you kidding me?”
As you can see, there is a point where risk transfer becomes a joke and can literally stop any work from getting done. As a business owner make sure you read your contracts. You certainly do not want to be on the receiving end of demands that fall into the category of "are you kidding me?”.
Until next time be careful out there and know your risk.
by: G. Kevin Nemith, President CNC Ins/Pfister Insurance a member of Hilb Mid-Atlantic Group.
knemith@hilbgroup.com
'Top 20 Insurance Brokers and Risk Advisors in the USA"
Comments
Post a Comment