Massachusetts Business owners, have you been tripped up by insurance requirements late in the game?
You are about to secure a contract or have already sealed the deal, and now you have to deal with the insurance requirements that may have initially taken a back seat to the main provisions of the deal. You then realize you don't have all the insurance requirements in place and securing these additional policies is going to cost you thousands of dollars more. Let's address these types of contracts and how to best deal with them.
Dealing with Irrelevant Requirements
Many of these contracts load up on insurance. When attorneys write these contracts, their goal is to make sure the company is covered from every possible angle, even if it doesn't make sense to the situation at hand. For example, the contract might call for you to carry a million dollar commercial auto policy, but you don't have any commercial vehicles, plus driving or using your vehicle is not part of the duties of the contract.
There are a number of ways to deal with such requirements. However, you must first ask yourself who is in the driver's seat of the contract? Do you have a special skill that they cannot find anywhere in the market place? Or do they have a waiting list of people who can do exactly what you can do? Perhaps it's about even. Bottom line, the more they need you, the more likely you may be able to negotiate these terms. The less they need you, the less likely you will be able to negotiate.
There are ways to negotiate and work with them; you should also work with your agent, who can help you find a cost-effective solution to dealing with these requirements. For example, there is something called "non-owned auto" that is relatively inexpensive for companies that rarely use vehicles on the job. However, this coverage comes with conditions; it also may not meet the requirements. Your agent can tell you if this makes sense and meets the requirements. Often times, this can be worked out through a discussion between your client and your agent. Not all companies will negotiate--actually, many won't and you need to make a decision if the contract is worth it once you know the cost of the additional requirements.
If you really need a contract, the money is extremely good, and you want a long-term relationship, then meeting the requirements without negotiating will go a long way. Working with your agent is key to making sure that these requirements are met. Keep in mind, insurance professionals work with third parties all the time as well as prepare the required documents showing evidence of coverage required for the contract. It's nothing new and it's part of the job.
Coverage is Key
In many cases, the coverages required in these contracts are coverages you probably need and should have in place anyway. Clients require you to have these coverages because they want to deal with the insurance company rather than deal with you should an incident happen. Insurance Companies are experts at handling liability issues and they can do so professionally without making it personal. Detaching yourself from these incidents helps you keep the contract, continue working and continue to receive your revenue from the contract. In the end, having the required insurance builds and maintains the relationship, provides you with legal costs and settlement amounts up to your policy limits should a covered incident occur. Also, the insurance coverage goes beyond one contract; you are covered for all work that is performed by your covered entity, not just for the client that required the coverage.
Not only should you have had these coverages all along, but it is also a cost of doing business. Consider building costs like this into your proposal if you have not already done so. Your agent is a crucial part of your team when addressing these issues because they will also work with your client to make sure the requirements are met. If you have the appropriate coverages in place and include a certificate of insurance in your proposal, it will show that you are well prepared to take on the contract, perhaps giving you a leg up over your competition.
Elliot Whittier Insurance Services, LLC is a local Trusted Choice® agency that represents multiple insurance companies, so it offers you a variety of personal and business coverage choices and can customize an insurance plan to meet your specialized needs. You can visit Elliot Whittier Insurance at www.elliotwhittier.com, email firstname.lastname@example.org, or call 800-696-3947 and ask for Chris Millerick.