Business insurance in N.C. helps protect your business against possible lawsuits. In today’s competitive environment, many partners, vendors, and investors may require small businesses to add different types of insurance coverage to a contract before finalizing it. This often adds another complex layer to contract negotiations.
Transferring some risk is a solid business strategy. You want to avoid a potential nightmare because you didn’t plan for potential risks. To minimize your chances of being held financially responsible for a loss, you need to develop an indemnity agreement that protects your business and your client.
Hold Harmless (Indemnity) Agreement
Once your client is aware of the risk, you can add a hold harmless agreement to the contract. The terms of this agreement are often broad and include language that outlines the extent to which your client will be held harmless.
Analyze the Relationship
Your clients should look at the total scope of the contract. For example, a small task could include significant risks. Your client will likely ask a lot of questions. They’ll want to know about your qualifications, accomplishments, and what you will be accountable for.
According to the hold harmless agreement, you will have to pay for any claims your business is responsible for. Therefore, make sure that you have the appropriate amount of coverage.
While researching business insurance in N.C., remember that your clients will likely ask for your Certificate of Insurance and Additional Insured Endorsement. Your client is going to make sure that everything is structured properly. Don’t try to alter the terms of the policy. Pay attention to any upcoming expiration dates regarding the contract. Try to be transparent at all times.
Handle all claims promptly. Stay in constant contact with your clients. Both you and your clients should always be on the same page regarding claims.
Why Do Contracts Need to be Insured?
To Cover Personal Injury or Property Damage
If you perform a high-risk service, there’s a chance that a personal injury could occur. Having adequate insurance in place will protect you in the event of such injury-related claims. Coverage is also essential if you cause damage to someone’s property and are required to repair or replace the same.
To Cover Cyber Liability
Coverage is often mandatory if the service includes technology. You should be covered in the event of an infringement dispute. Computer hackers are always lurking, so insurance covers you if the technology malfunctions or a hacker infiltrates the data and causes harm.
To Lease Commercial Space
Insurance is often required if the contract includes leasing commercial space. Landlords often require their tenants to have a minimum amount of liability coverage to handle any claims that occur on the property.
Other Things to Consider
If you are asked to include unusual requirements in the contract, that’s a red flag. Keep an eye out for really high aggregate limits, which may signify that your client isn’t ready for a high-end professional relationship. Also, pay attention to any pause clauses in the contract.
Business insurance often adds an extra layer of security to contracts in case something goes wrong. If you have any questions related to your commercial insurance coverage, contact our experts at Pittman Insurance Group, LLC, and we will assist you.