USI evaluates the effectiveness of your existing insurance program against liabilities your company assumes under contract.
Identify Opportunities for 3rd-party Risk Transfer

A General Contractor working on a new ten-story commercial building hired a subcontractor to install new electrical wiring throughout the building. The contract required that the subcontractor carry general liability insurance with additional insured status for all upstream parties.

After completion of the work, an electrical fire resulted from the subcontractor’s improper installation. The owner sued the GC, who tendered the claim to the subcontractor for defense and indemnification. The subcontractor’s insurance carrier denied claim because the Additional Insured wording only extended additional insured status during construction or ongoing operations. The general contractor submitted a claim under its own policy, which had a $100,000 deductible, resulting in out-of-pocket costs.

Upon becoming the broker, USI suggested modifying contracts to specify Additional Insured Status for both ongoing and completed operations on a primary and non-contributory basis under their policy. Indemnification/hold harmless provisions were reviewed and added to the contract as needed. The resulting financial impact for the general contractor was equal to the $100,000 deductible, as well as transfer of future liabilities to the subcontractor, up to the policy limit.

Mitigating Contractual Obligations

A prospective construction client was looking to build a commercial mixed-use project for an owner with construction values of $50 million. Lenders for the bank negotiating the project’s financing required the construction contractors to hold the owner harmless from liabilities related to construction and provide general liability/umbrella liability insurance with minimum limits of $25 million.

The client didn’t feel that the $25 million limit was warranted, nor did they want to incur the additional $200,000 premium. Dissatisfied with their current broker, the client approached USI looking for a solution to the problem.

USI completed a comprehensive risk assessment, analytics and benchmarking, demonstrating to the lender that liability exposure warranted $10 million of excess coverage, not $25 million. We successfully negotiated lower limits in the contract, resulting in a premium savings of $75,000 and compliance with the lease agreement.

Eliminate Coverage Gaps/Prevent Uncovered Loss

A subcontractor was looking to enter into a contract with a new general contractor which required the subcontractor to protect and indemnify the general contractor from any loss arising out of bodily injury, property damage and any other damages or loss related to design and/or installation error including economic loss.

The subcontractor’s General Liability policy provided coverage for claims arising out of bodily injury and property damage as well as construction means and methods, but no stand-alone economic loss coverage.

USI advised and facilitated the purchase of a separate Contractor’s Professional Liability policy for $30,000 additional premium to address other damages or non-bodily injury and property damage claims, such as third-party financial loss. This prevented a potential breach of contract and an uncovered E&O claim up to the policy limit of $1 million.

  • Protects against underinsured or uninsured losses that could otherwise be covered by insurance
  • Promotes and supports contractual compliance
  • Mitigates unreasonable insurance requirements in contracts

Like insurance policies, no two contracts are alike, frequently resulting in misalignment of exposure and coverage.

Additional insurance needs are often overlooked when assuming risk under contract, resulting in coverage gaps. Contractual obligations are frequently accepted without consideration for alternative transfer methods, terms, or available coverage.

USI conducts a comprehensive review focused on risk transfer options, preferred contract language, and alignment of coverage with your retained risks. This allows for informed risk management decisions when transferring, assuming and protecting against third-party liabilities. It also ensures compliance with third-party contractual obligations, as well as protects against uncovered losses up to the policy limit and/or the value of the contract.

We begin by reviewing our clients’ contracts to determine which risks can be transferred to a third party. We then partner with the client and their attorney to establish the most favorable contract language for all retained and assumed risks. Finally, we evaluate our clients’ aggregate contract exposures and current insurance policies and align the coverage to protect their contractual obligations.