Subcontractor Risk Transfer Agreement
As a general rule, contractual risk transfer should be seen as an attempt to isolate the insurance or risk coverage program from the organization of the loss and not as a substitute for that program. When losses are transferred to other parties, the organization`s long-term insurance or risk coverage costs should be less than would be the case if the organization were relying exclusively on its own insurance or other risk financing program to liquidate them. While risk transfer includes insurance coverage and transfers some of your risk to an insurance company, a comprehensive risk management program also includes contractual risk transfer. This is a broad topic, but this article will focus on contractual risk transfer and insurance requirements for subcontractors. Prime contracts generally require the subcontractor to maintain the markets and the same types and limits of insurance that the contractor must acquire and manage. Failure to comply with this provision could result in the contractor being subject to an appeal for breach. Contractors should ensure that their subcontractors take into account the requirements of the main insurance contract and certify that the subcontractors meet these requirements. Gibson is a consulting firm that helps clients access the proactive side of insurance. We specialize in working with companies that are looking for their lead — where they grow as an organization, differentiate themselves in the marketplace and prepare us for current and future risks. Together, we find the perfect combination of insurance and advice.
If you are involved in contracts and transfers of contractual risks, you want to be there on March 19th. Anyone in your office can participate and there is only one registration required (move all in the conference room to participate). Sign up today. The objective of risk management for work contracts is to transfer risks to the entity that is closest to it and is therefore best placed to manage and control losses. On the job site, this often means subcontractor. In this way, project owners will place the downstream risk on general contractors who, in turn, will reduce the risk to their subcontractors. Work allowance (WC) coverage should be covered by all subcontractors working on your behalf. Ensure that none of the subcontractors exclude employees who are actively involved in on-site work.