Before you start working with a new client, you’ll often be asked to review and sign a contract. This contract usually includes some insurance requirements that you need to follow. Here are some common insurance requirements seen within a contract.
1. Waiver of subrogation: When your client requires a waiver of subrogation be added to your insurance policy, they’re simply asking if something goes wrong and your insurance pays for it, your insurance company won’t go after your client to get the money back. This agreement helps prevent arguments about who is responsible for a loss, making sure that both parties’ insurance covers their losses.
Many carriers offer a blanket waiver of subrogation endorsement on their general liability, automobile liability, and workers’ compensation policies that provide the coverage to any of your clients requiring it in a written contract provided the loss was not due to your client’s sole negligence. You’re also able to schedule a waiver of subrogation for a specified client if necessary.
2. Alternate employer endorsement: If your client asks for an alternate employer endorsement, they are basically saying they want to be covered for any work-related injuries that happen to your employees. This means your client will have primary workers’ compensation coverage for your staff. Many carriers can offer a blanket alternate employer endorsement providing the coverage to all your clients listed within a written contract.
3. Additional insured endorsement: This is perhaps the most common insurance requirement. It means that if your business relationship leads to a lawsuit, your client will also be protected under your insurance policy. For example, if one of your employees causes a loss, both you and your client could be sued, and this endorsement helps protect your client in such situations. Coverage is often offered on the general liability on a blanket basis to any of your clients requiring the coverage in a written contract provided the loss was not due to the client’s sole negligence.
4. Primary & non-contributory endorsement: A primary policy is the first to respond in the event of a loss. When your client asks that coverage be provided, they’re asking that your insurance be the first to cover any losses, and their insurance will only step in once your policy limits are completely exhausted.
In the event of a loss where your client may be partially at fault, their insurance will only come into play after your policy limits are exhausted. As with the above, an endorsement can typically be added to provide the coverage to the general liability on a blanket basis for any client requiring the wording in a written contract.
If you would like assistance in deciphering insurance contract terms or making sure your insurance policies meet the specified contract requirements, contact a Marsh McLennan Agency (MMA) team member today.