It takes a lot of effort to win work; from marketing to clients and prospects, and responding to RFP’s, addressing scope, managing internal resources and more. It’s a detailed and involved process, and a great feeling to be selected for a project. Too often, though, great time and effort is spent winning work only to be presented with a contract that has extreme terms or insurance conditions.
Often, insurance conditions are the last thing reviewed when pursuing work, but insurance conditions can present additional, unanticipated costs, or impossible conditions for your firm to meet. To avoid this surprise you should:
- Start with your own Standard Agreement or Association (AIA, EJCDC, etc.) contract
- Secure acceptance of you Certificate of Insurance prior to beginning any work
- Engage your broker and legal counsel early in the process
A broker review focuses on Terms & Conditions that affect insurance coverage, but is not a review of your contract from a legal perspective. A separate, concurrent, legal review is a strongly suggested as combined counsel from both your broker and legal counsel will provide a set of comprehensive recommendations for use in negotiation with your client. Some of the common provisions in contracts that raise questions of insurance coverage and should receive a close read by your broker include:
- The types of coverage required (Pollution, USL&H, etc.) and exposures to insure against
- Broad insurance requirements in Additional Insured provisions, Notice of Cancellation provisions, High Limits, Extended Length of Cover requirements…
- Indemnity language that requires a duty to defend, heightens your standard of care, extends to parties you may not have a legal obligation of Indemnity, Warranty or Certifications.
- Prevailing Party language
- Risk management concerns including: ownership of Instruments of Service, jobsite safety, consequential damages, dispute resolution…
Experienced insurance brokers are essential to efficiently assisting in the management of your risks in professional practice and their knowledge should be shared. Too often, an experienced broker is seen as a resource simply for securing proper insurance, but as noted above they can, and should, be positioned as an informational asset. A broker focused on your industry should be actively involved in educating your staff about risks related to project types, scopes, and contract issues. And when insurance condition issues become obstacles, an experienced broker, who has been there and seen that, can help find the acceptable common ground that keeps your risk manageable while moving things forward so you can deliver the quality of services you strive to offer.