Limiting your liability and controlling insurance costs is on on going challenge. Every time you enter into a new contract you're accepting certain risks whether you know it or not. Each contract should be reviewed carefully to understand the extent of risk you are accepting. Many contracts are negotiable when intended or ambiguous language exposes you to more risk than you're willing to accept. It is very common for companies to engage outside resources like their attorney or insurance advisor to ensure appropriate language is incorporated into the contract to protect their interests. Having strong internal controls over your contracts will help you manage your insurance premiums and protect you from other business risks. Only after fully understanding your risks can you determine if entering into a contract is a good business decision.
Risk transfer protects the company and places [transfers] responsibility for
Indemnity provisions are often referred to as hold harmless agreements and are one of the primary vehicles by which a contractor can shift or apportion risk in a contract. Indemnity provisions may include three obligations 1) indemnify, 2) defend, 3) hold harmless the other party. Indemnity provisions are extremely effective risk management tools.
The other risk management factor to consider in addition to strong indemnification language is to be listed on the other party’s insurance as an additional insured on a primary and non-contributory basis.
Have your insurance advisor look at the contracts before you sign them. Risk transfer is complex and requires specific language to prevent you from being liable.
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