Celebrating
our 60th
Anniversary!
Contracts
should be
created by
your attorney.
This information is provided as an educational tool to begin the process of creating a contract, which should be completed by your attorney.
Your insurance agent should be included
in the process and can review the contractors coverage’s and certificates
of insurance working with you and your attorney
Lewis-Chester
Associates, Inc.
119 Summit Ave
Summit NJ 07901
Phone: 908.273.6100
Fax: 908.273.0192
Website:lewischester.com
Risk
Transfer to Contractors using written contracts and smart insurance requirements |
 |
When hiring a landscape contractor or contracting for snow removal, a substantial renovation or to build an entire new building for your organization, a written contract with each vendor or contractor should include insurance requirements, which
1.
Transfer your risk arising from his operations back to the contractor.
2. Make sure that he has the resources to pay for the damage he has caused.
When
the contractor in his contract with you agrees to hold you harmless and
indemnify you he agrees to legally defend you and pay for claims made
against you as a result of his work or control of your location. To be
sure he has the resources to pay these claims he agrees to carry insurance
with sufficient limits and terms to guarantee you will be protected.
To evidence this insurance protection the contractor provides you with
a “certificate of insurance” which shows the name of his carriers
and the limits he has purchased of the different types of insurance and
also says that your entity is named as an additional insured on his policy.
For
more information on this and other insurance subjects please visit: www.affordablehousing.com
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Indemnification
To the fullest extent permitted by laws and regulations, the CONTRACTOR
shall indemnify, defend and hold harmless OWNER and the officers, directors,
partners, employees, agents and other consultants and subcontractors of
each and any of them from and against all claims, costs, losses, and damages
(including but not limited to all fees and charges of engineers, architects,
attorneys, and other professionals and all court or arbitration or other
dispute resolution costs) arising out of or relating to the performance
of the Work, regardless of whether or not caused in part by any negligence
or omission of an individual or entity indemnified hereunder or whether
liability is imposed upon such indemnified party by Laws and Regulations
regardless of the negligence of any such individual or entity.
Certificate
of insurance
A certificate should be provided to you and should include wording warranting
that the contractor’s policy shall cover you the additional insured
certificate holder on a primary basis. “Certificate holder”
is insufficient wording. Wording must at least include “Certificate
holder as additional insured”
Coverage limits (Minimal)
In addition, you should require the contractor to carry minimum limits
of Insurance. The minimum limits we recommend are General Liability $1,000,000
per occurrence/ $ 2,000,000 aggregate and must include products/completed
operations cover. Additional limits of umbrella cover in the amount of
$ 4,000,000 excess should also be covered. If there is automobiles involved
the Auto Liability limit must also be $ 1,000,000. Worker’s Compensation
for statutory limits are necessary and should include coverage for sole
proprietors, partners & LLC’s if it is not a corporation. If
they are not properly covered your Worker’s Compensation policy
will become primary and you will be charged an additional premium as if
they were your direct employees.
Much higher liability limits are desirable. Larger contractors building on a large scale often carry $25 Million to a $100 Million and more. Remember also that their limits may be impaired or in other words other claims have already been made against their in force insurance. Remember their insurance expires and renewal certificates need to be requested prior to that “renewal date” each year.