By Chris Richmond
Originally Submitted to WorkBoat Magazine
We are often asked by our insureds to review the insurance clause in contracts they are asked to sign. All too often, unfortunately, the contracts have already been signed before we have a chance to review them. These contracts are often prepared by legal teams or pulled from the Internet. While it is important to have the legalities in a contract correct, it is equally as important to have the insurance aspects correct –and that is why a conversation with your agent is important before you sign on the dotted line.
A contract, when properly drawn and signed, can become an enforceable document. But for insurance purposes, just because you have signed the document does not mean that your insurance policy will react to it. Your insurance policy is also a legal contract, and the insurance company is only going to respond to the limits and conditions written out in your policy. It is important to make sure that the limits and conditions that you are insured for will meet the requirements in the contract you are signing.
In addition to limits there are often other stipulations that need verification with your agent before signing. Waiver of Subrogation and hold harmless clauses are often inserted. While these can be very beneficial to the party making the request these types of requirements need to be approved by your insurance company beforehand. Contracts often include the words “any and all” when referring to risks covered. Your insurance policy most likely will not react to “any and all” claims made against it. Again, have these clauses reviewed beforehand.
If your contract only involves a vessel then any General Liability and Workers Compensation limits that are required will most likely not apply. Your hull and protection & indemnity policies will react to claims made against the boat. Getting the party who is requesting these limits to understand this can often be futile. This is when you should get your insurance agent involved to help sort out the wording and coverage issues.
Contracts are required for many reasons. A boiler plate contract most likely will not fit your unique situation. Contracts are also negotiable. It is wise to involve your insurance agent in this process before signing any contract.
