Situation

Wholesale florist with plant maintenance contracts for over 100 commercial buildings. This client also creates and puts up large displays in malls throughout the tristate area. Client was required to provide certificates with specific wording based on their client’s contractual requirements. Prior to working with JGS they were not reviewing any of their contracts before signing them opening them up to a lot of unnecessary and in some instances uncovered liability. Many of the companies they worked with asked them to sign contracts under which they agree to “defend, indemnify and hold harmless” a counter party – generally for their own negligent acts, but, in some cases, for those of the counterparty and their affiliates for an excess amount of time. Even though the insured’s was accepting the contractual indemnification by signing the contract it did not necessarily obligate their insurance carrier to provide coverage aligned with the intent of the parties. Failure to review and account for these contractual obligations can result in an uninsured exposure – the insured could be obligated to pay for the defense and indemnification of the counterparty, without the benefit of insurance coverage to fund that obligation.

Solution

1. Review clauses and agreements
   • Ensured compliance with their current insurance program and that they will provide the coverage requested in their indemnification & hold harmless agreements
2. Review and amend coverage
   • Added coverage to policy via endorsement if necessary, enabling our clients to remove unfavorable and excessive clauses from their contracts
3. Review all contracts
   • Ensured their insurance policy was in compliance with their contractual requirements

Outcome

• Sections of their contracts exposing them to an unreasonable amount of liability were removed if they were not insurable or relevant to the company’s specific operations.
• Client walked away from a few smaller clients and jobs where their return did not exceed the potential risk the client was asking them to take on.

Successfully educated our client in contractual risk transfer, resulting in more educated decisions when negotiating their contracts

 
 
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