Every staffing company deals with contractual requirements when entering a new relationship or within their current client relationship. Insurance contractual requirements is a key part in the agreement.
In addition to your main coverages and sub-coverages with their own limit within a main coverage, we have recently seen two contractual requirements appear under the general liability: medical payments and damage to premises rented by you. These two coverages are sub-limited under the general liability policy.
Medical payments coverage
Medical payments are a general liability coverage that reimburses a third party for medical or funeral expenses incurred due to bodily injury or death sustained by an accident. This is also known as “goodwill” coverage, providing medical payments early in the claims process promotes goodwill and can have two main effects:
- Help preserve the business relationship. The quicker we act on the incident the less likely a future claim will arise.
- Help mitigate the overall expense with the injury or prevent the claim to go to litigation. A claims adjuster may request a signed release to settle to close the claim.
You may be contractually responsible to provide a certain amount of limit under medical payments coverage, which typically ranges between $5,000 – $10,000. If your insurer offers only $5,000 limit while your contract state $10,000, consider the following options:
- Explain that this coverage is goodwill coverage for bodily injury or death sustained by an accident. If medical payments are made, this does not prevent the third-party from receiving further settlement via the general liability limit(s).
- Some insurers will increase the medical payment limit on the policy or for a specific contract. An additional premium may be charged for increasing the limit.
Damage to premises rented to you
Damage to premises rented to you is another coverage you may see under the insurance requirements section in your contractual agreement with your client. This coverage applies to property damage caused by fire to premises rented to you for 7 days or less that you are responsible for. The standard limit of a commercial general liability policy is $100,000, while some insurers will provide up to $300,000 in coverage. This coverage will be included on any admitted commercial general liability policy.
Where damages to premises rented to you coverage is needed
- Renting a table or booth at a convention or expo
- Renting a space for a commercial kitchen
- Renting an event hall
Similar to the medical payments coverage, you may be contractually responsible to provide a certain damage to premises rented to you, per the terms of the contract. If your limit is lower than what is requested, you can:
- Explain that this coverage is specifically addresses property damage caused by fire to premises rented to you for 7 days or less.
- Provide examples of where this coverage would apply (renting a table booth at a convention/expo or renting office space for less than a week).
- Clarify that some insurers may increase the limit on your existing policy, but many insurers are limited $100,000 or $300,000.
Insurance contract review is an important part of any contractual agreement you have with your clients. Educating your clients on why the coverage is not applicable or why the current limit is sufficient will help save time negotiating current and future contracts.
If you would like more information, please contact a Marsh McLennan Agency representative.
