Being naïve does not mean you’re not at risk

By Doug Dolinar, Guidemark Inc.

The overreaching contractual obligation to assume responsibility for another party beyond the extent of your own negligence or willful misconduct is unreasonable and a clear and present danger to the industry.

I recently listened while an ATSSA member shared an experience, recounting the unsettling details of a lawsuit that altogether changed his approach to every project. For this member, had it not been for a negotiated settlement in exchange for a full release, a jury award would have easily exceeded the available limits of liability insurance and forced a sell-off of corporate assets. The hard-to-swallow reality of the matter was his involvement was simply a consequence of a far-reaching contractual obligation.

The business survived with memory of the experience serving as an endless reminder to never again roll over for blanket contractual risk-shifting. This member now fires back, many times successfully negotiating a narrowed responsibility fairly and appropriately aligned with the company’s presence on a project—something previously thought unachievable.

These circumstances are all too familiar and place high priority on the continued drive for awareness and education of the issues, contract review protocol, and a push for legislative changes.

ATSSA delivered a panel-style session at the 2023 Convention & Traffic Expo aimed are raising awareness, providing education and exploring a path to solutions. A group of about 30 volunteers has been working since early 2022 to begin addressing such issues. This group is now working to clarify its goals and chart a long-term path to help members on such critical issues. You can check prior blogs for additional information as well as watch our November 2022 webinar on “Leveling the Playing Field for Contractual Liability”.

Prior blogs include:

• Limit your risk in contracts with help from new ATSSA group, Aug. 23, 2002.
• Become familiar with “scope of work” and indemnity in contract agreements, Sept. 21, 2022.
• Learn to level the playing field in contracts at ATSSA webinar, Oct. 12, 2022.
• Contractual risk transfer and the “Additional Insured” clause, April 26, 2023.

For those of you who are new to the process of contract review protocol, the process is an evaluation impacting your final decision for action on a contract. To evaluate we must have criteria. Here the issues are lopsided contractual provisions favoring the drafter, typically the general contractor, through excessively burdensome obligations imposed on you, the subcontractor.

From the standpoint of the issues at hand we center on additional insured, indemnification, waiver of subrogation  and scope of work.  Our group has already created two resources I think you’ll find helpful: a Contract Review Checklist and a list of Indemnity Terms and Definitions.

In addition to helping reduce exposure to costly claims, these improvements can increase the availability of insurance to you and influence the cost and structure of your specific liability insuring program. A change to legislation in states that currently do not have anti-indemnification statutes—or have such that carry only partial application—holds potential to improve the overall insurance marketplace environment for your industry.

There is absolutely no question as to the critical importance of this issue for our industry, and we remain focused on the security of the industry and profitability of our members.

We hope you follow along as we continue to tackle these topics.

Doug Dolinar is president of Guidemark Inc. in Souderton, Pa.

NOTE: Information provided here is not legal advice. Rather, all information, content and references are for general informational purposes only.