Your company uses subcontractors to provide services for you or your customers? Would you be adequately protected in case of loss occur as a result of actions of your contractor?
contractors or subcontractors are used for a number of reasons such as the construction and maintenance of equipment, construction projects and renovations, etc. If you are not adequately protected and the contractor hurts someone, injured or causes property damage, you may be stuck with the financial burden of doing things.
The following steps are the precautions to be taken to help minimize the company's exposure to such a scenario.
Establish a written agreement between you and your contractor. In the agreement, the following should be included:
• Make sure the contractor provides Workers Compensation Board (WCB) coverage for their own staff. If you hire a contractor or subcontractor without WCB insurance coverage, you will be liable for that worker, if they are injured at work. Ask your contractor for Alberta WCB clearance certificate. This letter will tell you if a contractor or subcontractor has a WCB account is in good standing;
• Specify the insurance requirements and limits of the agreement. Generally, it is suggested that your exposure is to the loss is the minimum coverage you may need. For instance, if contractors are carrying proceeds of $ 2 million, but they only cargo insurance for $ 1 million, it would not be sufficient to cover total loss of product. If you're still not sure how much coverage your subcontractors should have, please contact your insurance professional to discuss;
• Ask to see certificates of insurance. A certificate of insurance is a method of obtaining evidence of the type of insurance, the limit of coverage and the insurance company the contractor. The certificate must be obtained annually from the insurance company or broker contractor or agent to protect against receiving a falsified document. When new certificates arrive, they should be reviewed to ensure coverage, limits and expiration dates of the policy are still acceptable in your contract;
• Request to add as an additional insured on their policy. This will then expand the policy of subcontractors to protect your business against liability arising from operations carried out by the subcontractor;
• Hold Harmless Agreements should be included and made to promote the company. The purpose of this agreement is to hold your company harmless under certain conditions. For example, if a contractor working on the roof and unsecured equipment injures someone below, the contractor will be responsible for damages and not your business. Be diligent and have all Hold Harmless wording of the agreement reviewed by your legal counsel;
• If your contractor uses subcontractors how do you know if they follow the same rules in the agreement you have with your contractor? To protect your business against liability, contractors must also sign the same agreement you need your contractor; and
• Once a standardized agreement is generated, it should be reviewed by legal counsel to ensure that it is valid and enforceable. If there are changes to an agreement, it should then be examined again by your legal counsel
In addition to the agreement, there are extra precautions that you can take as a company to ensure better protection against the negligence of a contractor such as .:
• Study a reputation for entrepreneurs through referrals or word of mouth;
• Review the company quality control program (security program) and who is responsible for ensuring compliance? It is important to know if they follow not only their own safety rules, but follow your company's security policies as well; and
• Monitoring of contractors and enforce security policies for the duration of a contract. Applying non-compliance, entrepreneurs will immediately ensure that they follow the rules for a safe workplace.
If you have questions about risk management, call us today!
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