What are the 3 Levels of Indemnification?

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If you stop and think about it for a moment, why does anyone refer back to a contract? It’s, unfortunately, when a problem arises. Depending on what the issue is, different contract articles may come into play. So before signing any contract, it’s best to understand what each article is about and how it can affect your ability to do the work. Let’s take a deep dive into one of the articles—Indemnification—as this article appears in almost all contracts in one form or another.

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Topics: Contracts

Defining and Understanding Force Majeure

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Triggering a Force Majeure is about living by the exact words. These clauses are typically interpreted with a very narrow view. The words are generally not given a broad meaning and therefore the exact wording used in these clauses is very important. First, let’s take a step back and define what a Force Majeure actually is. A Force Majeure Clause is a contractual provision that may operate to excuse a party from a contract as a result of an unexpected and disruptive event.

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Topics: Contracts

Why Do Contractors Have to Provide Additional Insured Endorsements?

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A common requirement you’ll find in a construction contract is for any hired contractor to provide additional insured status to parties within the contract. The purpose of this requirement is to protect an Owner, General Contractor and/or another Trade Contractor from potential claims that may arise from work the hired contractor is performing. By having the Owner and General Contractor listed as additional insureds on the hired contractor’s policy, this transfers the potential risk for work done back to the hired contractor.

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Topics: Contracts, Additional Insured

Differences Between Named Insured and Additional Insured: Part 2

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When working on a construction project, the company you are working for may ask to be an Additional Named Insured or an Additional Insured. It’s easy to believe that they are the same thing, but in reality, there are some significant differences between the two.

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Topics: Contracts, Additional Insured

Differences Between Named Insured and Additional Insured: Part 1

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Often, the terms named insured and additional insured get lumped together to be interchangeable. However, that is not the case. Keep reading to learn about each one!

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Topics: Contracts, Additional Insured

Solutions to the Wrap-Up Exclusion Endorsement

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Does the Wrap-Up exclusion found in many Trade Contractors’ General Liability program fill you with dread? This exclusion has historically been a troublesome risk transfer issue.

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Topics: Contracts, Wrap-Up Insurance

Termination for Cause vs. Convenience

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There may come a time during the course of a construction project when a contractor’s relationship is terminated. There are a number reasons this may occur such as:

  • The contractor’s financial trouble
  • Disputes regarding the quality of the work
  • Failing to adhere to the contract documents, or project schedule
  • Failing to pay trade contractors and material suppliers    

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Topics: Contracts

Proportional and Non-Proportional Reinsurance Agreement Differences

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Reinsurance is when an insurance company transfers risk to other parties by a formal agreement—thereby lessening its liability on catastrophic or multiple losses. Essentially, it can be defined as insurance for insurers, and it enables insurance companies to remain solvent after major claim events such as hurricanes.

It's important to know that both Treaty and Facultative reinsurance policies can be proportional or non-proportional in structure. Here are some differences between proportional and non-proportional reinsurance that your insurance company should know. 

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Topics: Contracts, Reinsurance

Understanding General Indemnity Agreement Definitions & Clauses

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A General Indemnity Agreement (GIA) is a legal document that outlines the Surety/client relationship. As a contractor, it is important to understand the terms and language found in this document. Here’s a quick reference regarding some of the significant terms you may encounter:

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Topics: Contracts

How a General Indemnity Agreement Affects Your Construction Company

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A General Indemnity Agreement (GIA) is essential in terms of risk transfer, and it is a necessary component of obtaining surety bonds. The GIA is a legal instrument used by surety companies to ensure they are “made whole” by any losses covered under their bonds. In the event a Surety suffers a loss as a result of the contractor’s failure, the contractor must reimburse the Surety for such losses.

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Topics: Contracts