Having a proper contractual risk transfer program in place helps to protect your company from liability for services and products of others on your project should an injury, property damage or a construction defect occur.
1. CONTINUITY OF INSURANCE -When selecting a subcontractor, verify that they can meet your insurance requirements prior to starting the work. For lengthier jobs, continue to validate that they are maintaining the appropriate coverage and verify that coverage remains in place should a project extend beyond their next renewal date.
2. INADEQUATE LIMITS - If your subcontractors have inadequate limits to cover a loss, it could spell trouble. Before beginning work, verify that the responsible party has appropriate limits that meet your insurance requirements.
3. UNSIGNED CONTRACTS - As owners continue to shift more liability to contractors via contract language, it is important to ensure contracts are duly signed and executed before work begins.
4. COVERAGE EXCLUSIONS - Coverage should be tailored to the specific exposures of the operations. Verify that insurance coverage for any contractors or service providers does not include exclusions for key areas of risk.
5. UNSPECIFIED COVERAGE TERMS - At times, a written contractual requirement may be needed to trigger the requested coverage under the subcontractor’s policy. Failure to stipulate the specific coverages and appropriate parties for which coverage is required could create questions about coverage.
6. MULTI-STATE CONTRACTUAL LAW - Indemnification provisions vary by state. This could present issues if operations are conducted in another state and the contractual wording puts you at a disadvantage for a loss within another jurisdiction. Ensure your legal counsel consulted for these and other situations.
Source: travelers.com - The Travelers Indemnity Company and its property casualty affiliates. One Tower Square, Hartford, CT 06183
**This material does not amend, or otherwise affect, the provisions or coverages of any insurance policy or bond issued by Travelers. It is not a representation that coverage does or does not exist for any particular claim or loss under any such policy or bond. Coverage depends on the facts and circumstances involved in the claim or loss, all applicable policy or bond provisions, and any applicable law. Availability of coverage referenced in this document can depend on underwriting qualifications and state regulations.