Hold harmless/indemnity provision: Indemnity provisions vary greatly, and these clauses have been the subject of substantial litigation.

If you have not done so already, have your attorney review your hold harmless clause for its scope and enforceability. Are all independent contractors required to sign the subcontract, including the hold harmless clause, before starting work? Does the hold harmless agreement contain a waiver of immunity under RCW Title 51?

Subcontractor insurance requirements: It is imperative to obtain certificates of insurance for all subcontractors working for you — prior to allowing them on the job site. Your subcontract agreement should contain a section detailing all independent contractor insurance requirements, mandating both the types and limits of insurance.

At a minimum, subcontractors should carry liability limits equal to your own, and you should be named as an additional insured on their policy. A copy of the additional insured endorsement should also be included with the certificate of insurance, as each company has their own form.

You should also insist that the coverage afforded you as an additional insured be primary and non-contributory to any insurance carried by you. In today’s insurance environment, other considerations include the financial strength of the subcontractor’s insurance carrier, and noting any major policy exclusions that would limit coverage for specific operations.

Finally, a certificate-monitoring program should be implemented to ensure that coverage remains in force throughout the contract term for all subcontractors.

Business auto

Self-insure collision coverage for some or all vehicles. As vehicles get older and have significantly depreciated in value, the premium for collision plus the deductible may not be justifiable for the lower valued auto. In addition, for companies with large auto fleets, the cost savings for carrying collision coverage relative to total exposure may make it attractive to self-insure collision, though it is still advisable to carry this coverage on highly valued vehicles such as heavy trucks.

Insurance companies are still coming to grips with the under pricing of the 1990s, and the cost drivers of the 2000s. Restoring rate adequacy will take some time, and the economic, legal and social environment will likely continue to work against a return to lower, or even stabilized insurance pricing.

While price increases will be difficult to avoid, options do exist to minimize the effect of the difficult insurance market. Contractors should use the risk transfer tools available to them, and consider retaining risk if it makes sense financially to do so.

Finally, consider your representation, and your agent’s knowledge of and access to the solutions available in the insurance market. Now more than ever, it is imperative that you are working with an agent that not only understands the insurance business, but the construction industry as well.

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