Each year the “landscape” for the communications industry becomes more complicated. Contractual requirements, litigation and the potential for extended liability are challenges we face with more regularity, making risk management a necessity. This article serves as a starting point enabling you to understand the process necessary to transfer risk and reduce your operating exposures to contractors that you may hire.
If the contractor you hire is not insured or inadequately insured, you could end up being responsible for any injuries to people or damages to property that your contractor may have caused while working for you. Plant expansion or modification, erection of a tower site, installation of major equipment or even remodeling your administrative offices all qualify for this process.
Include Risk Transfer in Your Risk Management Strategy
UNITEL urges you to use this information to help protect your company from unnecessary risks. Your overall risk management strategy should include contractually transferring as much risk as possible to your contractors and any subs (if applicable). A written contract that includes the scope of work and performance standards, timeline for completion, payment terms, indemnification and hold harmless language in your favor and contractor insurance requirements is essential. A written contract is the best way to document risk transfer terms and agreements.
Risk Transfer Checklist
Utilize Written Contracts
- Insist on a written contract with indemnification and hold harmless language in your favor (your attorney or UNITEL can help you with this).
Additional Insured on General Liability Policy
- Include a requirement in the contract that you be added as “additional insured” on the contractor’s commercial general liability policy and that your status be on a primary basis.
Coverage Through the Project Duration
- Require that the additional insured coverage include both work in progress (i.e. on-going operations) and completed work (i.e. completed operations) and that a specific length of time for the coverage be established.
Notice of Policy Cancellation
- Be sure that your contract calls for the contractor to maintain adequate commercial general liability, auto liability and worker’s comp limits of insurance and that you get a minimum of a 30-day notice if the contractor’s policy is cancelled (your UNITEL Advisor can help you with this).
Understand Certificates of Insurance
- Obtain certificates of insurance (COI) that describe the type and limits of liability, worker’s comp, and auto liability insurance in effect for the contractor (and any sub-contractors) and names you as the certificate holder as well as an “additional insured”.
Keep Files Organized
- Maintain organized files that include your contracts, certificates of insurance and additional insured endorsements. A suspense system (manual or automated) is necessary to track the certificates’ policy expiration dates. When a policy expires, contact your contractor, and request a new certificate.
Your Risk Transfer Process is Unique as Your Business
The process of risk transfer may include input from attorneys, insurance professionals and other industry resources to address the needs of your communications business. Consultation with your attorney and UNITEL Risk Advisor or the Risk Management Department are your best tools for implementing a viable risk management program.
This material is designed and intended for general information purposes only and is not intended nor shall be construed or relied upon as specific insurance and/or legal advice. However, Unitel has a highly trained and experienced staff to assist you with your risk management needs and all you have to do is reach out.