Page 68 - IEC Insights Sept-Oct21

FEATURE

READING THE

FINE PRINT

Understanding Contractual

Liability Coverage

BY NATHAN S. OLAND, AIC, LUTCF
SENIOR NATIONAL ACCOUNT EXECUTIVE
FEDERATED MUTUAL INSURANCE COMPANY

Working with contracts can be necessary each party is responsible for and how jobs. By carefully reviewing them and
for electrical contractors — job contracts, liability may be assigned in the event working with a qualified attorney when
work orders, bid letters, and insurance of a dispute related to that contract. needed, a contract can go a long way
contracts are vital to ensuring liability in allowing your employees to focus on
coverage applies to specific jobs. Even if An insurance policy containing contractual their jobs with less fear of a third party’s
you are familiar with using contracts, there liability coverage is separate from other accidental losses or damages.
is always more to learn to better help business contracts, and it is important to
protect your business, and it’s important remember that your insurance may not Consider these recommendations when
to understand the dangers of not reading respond to all promises made in another entering into a contract:
or understanding what is included in them. contract. A general liability policy may • Review the terms of the agreement
contain some coverage for liabilities, but in their entirety including, but not
not all, and it may defend or pay damages, limited to, language related to
WHAT IS but there is a chance your own losses insurance requirements.
CONTRACTUAL may not be covered. This is where specific • Discuss with your attorney how to best
contractual liability coverage can come
LIABILITY COVERAGE? into play and help protect yourself and limit your responsibility to damage
your business. resulting from your work or products only.
Contractual liability coverage is insurance • Discuss with your attorney how you
that helps protect against liabilities that can best avoid assuming another’s
policyholders assume when entering UNDERSTANDING negligence or liability.
into a contract. When a business YOUR CONTRACT
performs work for another company • Being cautious of language, including
or hires another company to perform Having a thorough understanding of the the words “defend,” “indemnify,” or
work on their behalf, the parties may terms of your contracts can help give you “hold harmless” and be sure to discuss
enter to a contract identifying what those terms with your attorney.
an advantage when working on different

66 Insights Magazine | September/October 2021 | www.ieci.org