Author, Chase Hixson, Account Executive, Human Services, Rancho Mesa Insurance Services, Inc.
Recently, a non-profit client of mine asked the question: What are the steps I should take with vendors, contracted professionals and partner agencies to make sure my organization is protected should a claim arise as a result of their work? This is a common exposure to many of our clients, and there are several steps that can be taken to protect your business.
1. Verify the Proper Insurance is in Place
Any person/organization that you consider working with should be fully insured and able to provide you with a Certificate of Insurance, which lists the coverages, carriers and limits of insurance they have in place. Without their own insurance in place, your company is now assuming full responsibility for anything that may occur as a result of their negligence. Depending on the nature and scope of the work being performed, different types of insurance will be required. An insurance professional can help you determine the specific coverage needed.
Example: A charter school has hired a local animal shelter to bring animals to their students and teach about conservation. One of the animals bites a student. If the animal shelter does not have the proper insurance, the charter school’s insurance will be liable for any action taken against the school.
2. Name Your Business as Additional Insured
In addition to verifying that the correct coverages and limits are in place, you should also require they name your company as an additional insured on their policy. By doing this, your organization will now be indemnified under their policy for claims arising as a result of their work, in which you are named.
Example: In the example where a charter school has hired a local animal shelter to bring animals to their students and one of the animals bites a student, by requiring the animal shelter to name the charter school as an additional insured, the school is covered under the animal shelter’s insurance.
3. Provide a Waiver of Subrogation
A waiver of subrogation means an insured (and their insurance company) are waiving their right to subrogate against another party, should their employee suffer an injury on your premises. Most independent contractors aren’t required to carry insurance, so this wouldn’t apply to them. However, if employees of another company are performing work on your premises, it is wise to have them waive their right to subrogate against your workers’ compensation carrier.
Example: A charter school has hired a local animal shelter to bring animals to their students and teach about conservation. While presenting, an employee of the shelter trips and injures their knee. A waiver of subrogation would void the animal shelter’s workers’ compensation provider from seeking subrogation against the charter school’s workers’ compensation policy. The employee will still be treated, but you won’t suffer the penalty for it.
I strongly recommend reviewing your processes regarding vendor, independent contractors and partner agencies to see what is currently in place. Far too often steps are skipped and businesses are unaware of the liability they are assuming. If you have any question about a specific circumstance, please don’t hesitate to give Rancho Mesa a call at (619) 937-0164, we are happy to assist.