Business Insurance And Signing Contracts, What You Need To Know Now
· by Matt Fox · posted March 8, 2008
· filed under Business Insurance, General Liability category.
As a business owner, when you sign a lease or other contract there is usually a clause about your responsibility to carry insurance. It could require commercial general liability, workers comp, business auto liability and/or professional liability insurance. Too often we business owners, out of their eagerness to just get it over with, sign the contract without really reviewing this clause.
Then you call me, the insurance agent, and tell me you need a certificate of insurance to meet the requirements of your contract. And this is where problems start.
Recently, we’ve seen a handful of wrong or difficult to place requests in these insurance clauses. Here are a couple of examples I’ve recently read:
- $2 million combined single limit commercial general liability.
- $2 million per occurance/$5 million aggregate commercial general liability.
The first one is actually a description of business auto liability coverage, even though it’s asking for commercial general liability (a huge difference in the two).
The second is simply difficult to place because a standard commercial general liability policy would be $2 million per occurrence/$4 million aggregate. Now I have to ask the underwriter to make exceptions. If they won’t make the exception then I have to find a company that will. The client also gets to pay for the extra $1 million aggregate above the ‘typical’ policy.
Naturally, you want to have attorneys review your contracts before you sign them. These were reviewed and missed. Not all attorneys understand insurance language or what insurance industry standards exist.
I would also recommend you have your insurance agent review any insurance clause before you sign any contract. At least then you’ll have any idea how difficult or expensive it will be to fulfill the contractual obligations you’re agreeing with when you sign.
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