What is Contractual Risk Transfer?

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Contracts are often complicated and if you are not an expert in reading them, sometimes important details can be overlooked. There are significant risks inherent in every construction project. These risks can be driven by site conditions, the scope of work, an owner, or the contractors themselves. Regardless of the origin of the risk(s), they all have one thing in common - each contract executed will contain a clause transferring those risks from one party to another. This is done to eliminate a party’s exposure to risk.

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Topics: Contracts, Contractual Risk Transfer

The Role of Insurance vs. Indemnification in Contracts

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In a contract, you are contractually bound by the indemnification article to pay for liabilities in whatever form you prefer. Payment of potential liabilities could bankrupt a company when the liability’s value exceeds the assets of the firm. As a result, contractors obtain insurance to cover these situations. The Owner typically recognizes this and includes another contract article (“Insurance”) to ensure the contractor has adequate means to pay for its liabilities, thus protecting the Owner.

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Topics: Contracts

Before You Sign That Renewal, Did You Review Your Current Insurance Program?

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As a Contractor, you wear a lot of hats – salesperson, customer service, quality control, etc. You understand you cannot be satisfied with the status quo if your business is going to thrive. You must be constantly looking for new jobs, sourcing quality materials, and providing excellent work for clients every day. One hat you need help with is your insurance program. If your Broker is a true business partner, he/she gladly wears that hat.

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Topics: Contracts, Construction Insurance

Construction Opportunities for Women Are On The Rise!

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The National Association of Women in Construction (NAWIC) and Safe Site Check-In shared the results of a workforce survey. This survey consisted of over 700 women in construction and was conducted in early February 2021, over a variety of construction jobs and titles.

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Topics: Surety Bonding, Contracts

How Contractors Can Work With Their Surety to Avoid Financial Ruin

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There can be a myriad of problems when a Contractor cannot fulfill its contractual obligation in connection with a construction project. This puts the Owner in a position to suffer a financial loss. In addition, the Contractor’s subcontractors and material suppliers may not receive payment from the Contractor for labor performed or materials supplied.

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Topics: Surety Bonding, Contracts

How Liquidated Damages & Consequential Damages Interact in a Contract

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Construction contracts can be overwhelming when you’re not looking at them every day. That’s why it’s important to understand your contract and the types of classification damages that could be written in it. Even though disputes are inevitable, understanding your contract will ultimately give you a leg up during the claims process. Let’s explore how liquidated damages and consequential damages interact in a contract.

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Topics: Contracts

3 Types of Construction Contract Damages

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In today’s construction climate, building projects and construction contracts can be extremely complex. A Contractor must become thoroughly familiar and fully understand the contract’s terms and conditions.

Any uncertainty with the provisions in a contract may lead to costly disputes whether the resolution is by way of mediation, arbitration, or litigation. All of these dispute resolution forums can be expensive and time-consuming. The ultimate purpose of dispute resolution is to determine the amount of money the party claiming to be damaged by a contract breach can reasonably expect to recover. 

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Topics: Claims, Contracts

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