12/21/2011
A MESSAGE FROM MIKE-
THIS MONTHS TOPIC.................
[i]Contractors, Subcontractors, and Contracts
A little knowledge, keeping informed, and the right risk management and insurance partners can make all the difference.
One of the greatest challenges that contractors face today is the General Contractor and Subcontractor contract language for insurance – especially the indemnification clauses. These challenges have helped make the contractor insurance marketplace so volatile. General Contractors feel the need to transfer as much of their risk as possible. Subcontractors often believe they are being handcuffed and pushed into contracts with which they disagree.
The influx of “low cost” subcontractors, coupled with ever changing laws and regulations have made it difficult for Subcontractors to find appropriate and affordable coverage. This can make it very difficult for Subcontractors to meet the ever stringent contract requirements made of them.
The continuously growing litigious atmosphere has forced General Contractors to protect themselves as fully and completely possible. A “CYA” type of prevailing attitude. The ever increasing likelihood of being brought into claims situations necessitates strict risk management techniques.
Caught in the middle are the risk managers, brokers and insurance companies. All looking out for the best interests of their clients; often having to change hats depending on which client they are dealing with.
In a perfect world every contract would be fair and equitable to all sides. But that is not the reality. It is usually whoever is swinging the bigger hammer that tends to make the rules; so it is up to each organization to be as proactive and informed as possible.
However, there are actions that contractors and brokers can take to help with these issues:
•Check the contract. Review the language. Have the legal requirements been met? Are the requirements enforceable? Do they meet the intended goal?
•Keep informed. Know the state laws and regulations.
•Find the right broker, consultants, and insurance company. They can be indispensable in all of these processes.
•Negotiate – always. While not always fruitful it can often be worth the effort.
The issue of contractor contract language remains complex and will continue to evolve
as new legal and social precedents are established. It is imperative to be aware of these issues and for contractors to surround themselves with properly equipped consultants.
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[1] Michael A. Mason, CIC, ARM is President and Operating Manager for MASON GROUP INSURANCE. For more information on MASON GROUP INSURANCE, please visit www.masongroupins.com
The information set forth in this document is of a general nature and provided for informational purposes only. The content of this document may omit certain details and cannot be regarded as advice that would be applicable to all conditions, situations or businesses. In addition, the information presented is not a substitute for a thorough risk management survey of your business operations. Readers seeking resolution of specific issues or business concerns regarding this topic should consult their professional insurance consultant. Mason Group Insurance does not warrant that the implementation of any view or recommendation contained herein will result in the elimination of any unsafe conditions at your business locations or with respect to your business operations.
Mason Group Insurance, MGI, is an El Paso, Texas Independent Insurance Agency. We can meet your Business and Personal Insurance needs. This includes home owners, auto, life, health as well as commercial property, general liability, workers' compensation & auto.
