Risk Transfer
A 50-State Compendium
You face issues regarding risk transfer every day. The rental of construction equipment is most often accomplished through written agreements and these agreements will often attempt to transfer the risks that arise from the work from one party to the other. The two main vehicles for risk transfer in a written contract, are the use of indemnity and insurance provisions.
- AN INDEMNITY PROVISION IS: A contractual right or obligation under which all or part of a loss is transferred from one party to another.
- AN INSURANCE PROVISION IS: A contractual right or obligation under which a party agrees to purchase and maintain certain insurance, both to protect itself and to protect other parties as required by the contract.
When a party attempts to transfer risk through a contract by using indemnity and insurance provisions, there are two main goals:
While the first goal seems evident, the second is not. There are a complex and varied set of statutes and case law, in particular for indemnity provisions, that vary from state to state. If a provision is not properly drafted in accordance with the law of the state that applies, a non-compliant provision is subject to be held void and without effect. This state by state complexity often presents Crane and Heavy Equipment rental companies with difficulty in incorporating the proper language into their agreements. The first difficulty is in determining and selecting the correct language and the second is in developing a mechanism to incorporate the correct language into a standard rental ticket.
Risk Management
As part of ongoing risk management work, we have developed a 50-State Compendium of Indemnity and Insurance contract provisions that will assist heavy equipment rental companies in dealing with these challenges. This document includes separate and complete indemnity and insurance provisions for each state. These provisions provide for the most extensive risk transfer that is allowed under the laws of each state, including compliance with the various Construction Anti-Indemnity and Anti-Insurance Acts that are found in many states. These provisions are available as a resource for you. Further, through a cutting-edge contract management process, that is only available to the insureds of Redstone Heavy Iron, these state-specific provisions are incorporated into the equipment insured’s rental agreements, without the need to continually amend and rewrite agreements based on the state where the work is taking place.