What You Need to Know About Contractual Liability

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Written Contracts have increasingly become part of our lives. Insurance contracts are no exception. It is more important than ever that you understand everything included in any contract that you are signing. Reading this information should help.

Liability – You Asked For It!
Some common contract provides to be aware of are:
– Hold Harmless and/or
– Indemnity Agreements
These provisions mean that you could be held financially responsible if another party in the contract is liable due to your actors or those of your subcontractors. The scope of these guarantees can go beyond your insurance policy’s coverage. In other words, there is no limit to the extent of the liability you may be assuming, and your insurance coverage may not fully protect you.

Contractual liability means that you agree to be responsible for others actions. Contractual liability can go beyond common civil law and may require discussion with your insurance representative and attorney. Contractual liability can usually be covered by insurance, sometimes for an additional cost. Be sure that you fully understand the financial ramifications of all contract terms before signing a contract.

Contractors and Subcontractors. If you sublet any part of your work, you are a Contractor, even if you are not involved in construction. Your legal responsibilities can include the operations of your subcontractors, such as liability for operations and injury to your subcontractor’s employees. Confirm that your subcontractors are properly licensed and insured. Your written subcontractor agreements should require your subcontractors to name you as an additional insured on their general liability insurance and provide you with a certificate of insurance so stating.

A subcontractor’s contractual liabilities are often governed by the terms of the contract or agreement they are signing. Be sure you understand all the liability you have assumed by the terms of any agreement or contract you are signing.

Are the people you are hiring independent contractors or your employees? It makes a difference in the eyes of Florida Statutes, Workers Compensation Law and the IRS. The following link from the IRS website will help with determining if the person is an employee or independent contractor. https://www.irs.gov/newsroom/understanding-employee-vs-contractor-designation.

Certificates of Insurance. A certificate of insurance provides proof of insurance, but it’s only a snapshot of the coverage in effect the day the certificate is issued. Nothing more. Only the policy, not the certificate, controls insurance coverage. Not all insurance companies provide notice in the event coverage stated in the certificate of insurance materially changes or ceases. You may wish to request a new certificate of insurance from time to time. When requesting a certificate of insurance, please provide both the name and mailing address of the certificate holder. If it is to faxed or emailed, we are glad to do so, the mailing address is still needed.

Additional Insured. Naming another party as an additional insured on your insurance coverage is a frequent request. The additional insured request should be part of a contract or written agreement. Adding an additional insured, however, does not expand the scope of your insurance coverage. As always policy language controls coverage. Adding additional insureds potentially dilutes the limits of your liability coverage. Be sure to reviews your liability limits.

Disclaimer: Florida Smart Insurance does not provide legal advice. Asking a licensed Florida attorney to review any contract or agreement you are considering signing is always a good idea. The insurance policy always controls coverage.

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