THE ROLE OF INSURANCE REQUIREMENTS WITHIN AN ORGANIZATION By Aaron Hardiman, MBA, ARM

COST OF DOING BUSINESS Average Cost of Risk $13.40 per $1000 of revenue 539 cases 330 were related to contractual issues million total 30.2 million paid out 14 Breach of contract law suits

TOPICS Liability Workers Compensation ISO SB-425 What constitutes a contract Examples Questions

LIABILITY

TYPES LIABILITY Premises Liability-Responsibilities placed upon owners and occupiers of property to keep the premises in a reasonably safe condition so as not to injure persons coming on the property. Contractual Liability-Liability assumed by a party under a contract by express language, implication, or operation of law; includes not only the obligation of a party to perform in accordance with the contract but also such other obligations as may be assumed, e.g., those arising from indemnification or hold harmless clauses.

CONTINUED Professional Liability- form of liability that results from professional advice and service. Examples= Consultants, Attorneys, Financial Services, Engineering, Accounting, and Medical Professionals. Vicarious Liability-A Legal responsibility that occurs when one party is held liable for the actions of a subordinate or associate because of the relationship between the two parties.

ADDITIONAL INSURED STATUS A type of status associated with general liability insurance policies that provides coverage to other individuals/groups that were not initially named. After endorsement, the additional insured will then be protected under the named insurer's policy and can file a claim in the event that they are sued. (ISO CG 2010 and CG 2037 or equivalent)

WAIVER OF SUBROGATION A special type of endorsement on a property-casualty insurance policy. The Waiver of Subrogation prohibits the insurer from attempting to seek restitution from a third party who causes any kind of loss to the insured. Applies to Liability and Workers Compensation

INDEMNITY LANGUAGE Assumption of primary liability; to pay irrespective of another's default 12.11Indemnification. Company shall release, defend, indemnify and hold harmless City and its officers, agents and employees from and against all damages, injuries (including death), claims, property damages, (including loss of use), losses, demands, suits, judgments and costs, including reasonable attorneys fees and expenses, in any way arising out of, related to, or resulting from the services provided by Company to the extent caused by the negligent act or omission or intentional wrongful act omission of Company, its officers, agents, employees, subcontractors, licensees, invitees or any other third parties for whom Company is legally responsible (hereinafter Claims). Company is expressly required to defend City against all such Claims.

WORKERS COMPENSATION

An employee is automatically entitled to receive certain benefits when he/she suffers an occupational disease or accidental personal injury arising out of and in the course of employment. There are four types of WC benefits: Income Benefits, Medical Benefits, Burial Benefits, and Death Benefits.

WHY ASK FOR A WAIVER OF SUBROGATION A roofing contractor is working for the City of Allen. While making repairs to a roof an employee of the contractor is injured. Under these circumstances the insurance carrier could attempt to collect for the paid claim. A Waiver of Subrogation prevents the insurance carrier from pursuing the City. State of Texas does not require coverage

ISO Statistical, Actuarial, Underwriting, and Claims Policy Language Information about specific locations (property inspections) Technical Services

SB-425 Standardized Insurance Forms (ISO) All forms must be approved TDI Commissioner COI does not constitute a legal obligation COI (Sec ) Is not a policy of insurance

HOW TO PROTECT YOUR ORGANIZATION Remove all non-approved insurance documentation (affidavits) Implement insurance requirements that create a barrier Require copies of endorsements Ensure your organization is tracking COIs and following established procedures

WHAT CONSTITUTES A CONTRACT Offer and Acceptance Mutual Assent Consideration Does your contract meet the common law criteria???

CERTIFICATE OF INSURANCE where required by written contract and allowed by law

EXAMPLES Lease agreement Contractor on owned property Contractor driving to various owned locations Developer, Contractor, Subcontractor on location City Attorney Structural Engineering Joint agreements Service providers Independent employees Staffing agencies

QUESTIONS????