One Contract. Four Lines of Defense.

Having the right contract language gives you four layers of protection.

by Kyle Rask, Concrete Pumping Insurance Program Manager, NBIS

If you’ve been in business for any length of time, you’ve likely heard about—or learned—one of the most important lessons there is to learn in the concrete pumping industry: If you have a claim, contract language can be the deciding factor in initiating complete risk transfer and suffering a policy limits loss.

By ensuring the legally preferred contractual language is embedded within each of your company’s contracts, in accordance with each state’s laws—whether it’s a daily work ticket or a long-term rental agreement—you can effectively optimize your risk transfer potential, help mitigate your losses and do your part to fight against rising insurance costs.

However, while those are all really critical benefits to knowing and understanding what needs to be in your contracts, perhaps the biggest benefit is the fact that you’re essentially teeing up four defenses in the event you find yourself immersed in a claim.

If your daily work ticket or contract has an indemnification clause, an additional insured clause utilizing preferred language, a tie-in to the B-30 standards and a care, custody and control clause (also known as the “borrowed servant” clause), then you’re putting yourself in the best possible position to defend yourself.

Here’s how each of these breaks down.

Indemnification Clause

At its most basic level, indemnity is the promise to pay for the cost of possible damage, loss or injury and determines the level of liability concrete pumping insurance policyholders are assuming or passing on to their customers. Indemnification is driven by the particular state you’re operating in and is typically broad-based, intermediate or limited.

Below is an example of each form of indemnity:

1. Broad Based: The contractor is at fault—regardless of who is actually at fault—and indemnifies the concrete pump company for the concrete pumping company’s sole negligence, the contractor’s sole negligence and any joint negligence of the two. The entire risk is transferred to the contractor. This is the most onerous of indemnity clauses and the one most targeted by anti-indemnity legislation.
2. Intermediate: The contractor assumes responsibility for its own sole negligence or partial negligence. If the concrete pumping company is solely at fault, there is no indemnity. There are two types of intermediate indemnity:
   1. Full Indemnity (“broad based”): If the contractor is partially at fault, he pays all the damages. This allows a concrete pumping company who was 99 percent at fault to receive indemnity from the contractor who was only one percent at fault.
   2. Partial Indemnity: Indemnity is on a sliding scale based on the extent of the contractor’s negligence. This sets a cap on the amount of indemnity that can be had. If the concrete pumping company is 51 percent at fault it is indemnified only for 49 percent of the total damages.
3. Limited: The contractor assumes only the responsibility for its own negligence—if it is solely at fault. There is no protection if the concrete pumping company is even partially at fault. All states allow limited indemnity provisions.

Additional Insured Clause with Preferred Contract Language

Additional Insured clauses are often the most favorable risk transfer tools you can have in your contract for two reasons: (1) When you can’t get protection through an indemnity clause, you may find protection through an additional insured clause; (2) Becoming an additional insured on your customer’s insurance policy, by way of a written contract, affords you the same liability protection your customer would have under its insurance policy for covered claims, including defense obligations by the customer’s insurer. By becoming an additional insured on your customer’s insurance policy, you have two insurers to call on for defense and indemnity coverage.

Requirements for Standards of Care/Tie-In to ASME B 30.27 Roles and Responsibilities

Incorporating the ASME B30.27 safety standard into your contract assists your insurer’s defense team in making liability arguments as to both the standard of care and responsibilities the contracting parties agreed to follow by. In the event of a loss where a dispute arises as to who was responsible for a specific task during concrete pumping operations, ASME B30.27 becomes the standard that guides litigators to delineating roles and responsibilities. Should one of the contracting parties fail to perform according to the standard of care outlined in the B30.27, litigators can refer back to the agreed-upon terms within the contract.

Care, Custody and Control Clause

During concrete pumping operations, it’s common for the concrete pump operator to be working under the direction and supervision of another party, such as the customer’s pour supervisor and/or the placing crew (hose man). Who had the right to control the concrete pump operators’ activities becomes a critical liability argument. So to ward offliability as to who is responsible for directing the concrete pump operator’s activities on a given job, concrete pumping service providers can benefit from inserting a “care, custody and control” clause, also known as “right to control” clause, into their daily work ticket or contract. In doing so, concrete pumping companies are contractually transferring the risk back to the customer(s) supervising and/or directing the concrete pump operator’s activities at time of incident.

For more information on how to optimize the amount of protection afforded by your contract, contact a member of the NBIS Risk Management team today by calling (877) 860-RMSS or visiting www.NBIS.com.