Contracts are the ‘start’ of a project, it is the point on which your firm and your firm’s client agree on the details of what will transpire on the project. There are a few items to keep an eye out for with regards to insurance.
Subconsultants requirements in a contract are an important area to pay attention to. Does the contract want your firm’s subconsultants to have the same insurance requirements as your firm or does it not speak to the insurance for your subconsultants. If it doesn’t address the insurance for your subconsultants then it is suggested that the subconsultants carry the same limits and policies as your firm is required to carry.
The insurance requirements section is another area to pay close attention to. Do the insurance requirements have language that your policies may not have, such as contractual liability? Does the insurance look like it is geared towards a contractor rather than an architecture/engineering firm?
Does the contract have that your firm will pay for the defense for your client? Insurance policies will not pay for the defense of your clients. It will pay for your firms own defense but not for others.
Does the contract with your subconsultant have a limitation of liability? If so, does the limitation of liability make sense for the work the subconsultant is performing?
The indemnification clause is an area that causes issues with the coverage on professional liability policies. If you have questions, be sure to have your insurance company review the clause for insurability.
In addition to an insurance review of a contract, always have your firm’s attorney review the contract for legal issues.
If you have any questions about what to look out for in a contract please call, or email, your Professional Underwriter agent for assistance.