By: Sherri L. Worman

Sophisticated parties in large projects know that it is not unusual for claims of all types to occur during the course of the project. Despite everyone’s best efforts, claims for property damage, material loss and personal injury are all examples of foreseeable risks that may need to be addressed. Acknowledging that these risks are possible, the parties can utilize risk transfer strategies in their contracts to limit their liability for claims and adopt procedures for handling the anticipated risks. Helpful contractual provisions to consider include waivers of subrogation and reciprocal insurance requirements.

First, the parties should identify the types of insurance that would provide coverage for the foreseeable claims that may be experienced. These likely include builders risk insurance, commercial general liability insurance, workers compensation insurance, professional liability insurance, property insurance and perhaps more specialized types of insurance depending on the project needs. After analyzing which insurance is necessary, and in some cases required, the parties may decide to negotiate which party can get the best rate for coverages that may be available to more than one party.