For the great general contractors (GCS) and their subcontractors, the contract is where the project risk is controlled or is allowed to expose dangerously. While the scope, the price and the calendar are very careful, it is often the insurance clauses that calmly determine how good you are protected when things go wrong.
Throughout my career, I have seen some clauses come out again and again at the negotiation table. They may seem like a “standard language”, however, they are all that is standard in their impact. Here are six of the most discussed insurance provisions, why they care and how general contractors must be addressed.
1. Extra insured guarantees
2. Compensation provisions
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Why is it negotiated: The anti-indemnification statutes of the state and the different interpretations make this clause a legal minefield.
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Risk if you overlook: Too large language can be inapplicable, while too close a clause can return to the GC.
- Best practice: Align the wording of compensation with the insurance requirements to ensure that there is a coverage of the liabilities that you have agreed to assume by virtue of your contract with the owner.
3. Resignation of subrogation
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Why is it negotiated: The insurers prefer to preserve their right to recover from the guilt festivals, while the owners and GCs want to avoid the delays of the fingers and the delays of the project.
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Risk if you overlook: Without a resignation, an insurer can sue another part of your project, supply relationships and link resources.
- Best practice: Apply resignations to all parts of the project and confirm that they are endorsed in policies, not just refer to the contract.
4. Primary and non -contributory language
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Why is it negotiated: This determines the order in which insurance policies respond.
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Risk if you overlook: If you are missing, the GC policy could be forced to share or contribute before the policy of the subcontractor is completely used.
- Best practice: You need a primary and non -contributory endorsement, do not trust the interpretation of politics.
5. Duration of operations coverage completed
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Why is it negotiated: Carriers can only guarantee coverage of operations completed for one year, while contracts often require up to ten years to coincide with the replacement status.
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Risk if you overlook: If the coverage ends early, latent defects may appear without any insurance to cover them.
- Best practice: Verify politics language for the full period before work begins.
6. Umbrella insurance requirements/excess
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Why is it negotiated: High limits can be expensive and SUn can argue that they are excessive for their trade.
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Risk if you overlook: Insufficient limits leave the GC exposed when catastrophic claims exceed the primary policy of a subcontractor.
- Best practice: The base limits in risk exposure, not only the size of the contract and require a follow -up coverage on all the necessary underlying policies.
Final thoughts
Contracts are often signed under time pressure, but insurance clauses deserve deliberate attention. These provisions not only dictate who pays, but can also determine if a loss is covered.
The smartest GC and subcontractors involve their insurance advisers in the contract review process. In negotiating these clauses with foresight, reduce disputes, keep projects in motion and ensure -when insurance occurs, your insurance responds in the way you intended.
