Before You Sign On The Dotted Line, Consider These Risks

A graphic of someone signing a contract with a warning to consider the risks of signing a contract

Contracts are a common and unavoidable part of our modern lives. Whether it’s starting a new job, hiring a landscaper, or buying/selling a vehicle, there’s no getting around the need to sign contracts. In an ideal world, an agreement should protect both you and the other signing parties: each party should be contractually responsible for their own negligence. In the real world, this isn’t always the case.

It’s not unusual for contracts to contain an indemnity clause. By “indemnifying” the other party, such a clause places all risk and responsibility on you. If you agree to these terms, you virtually agree to protect the other party in the contract, and your liability insurance may have to defend and pay damages assessed against someone else, for their own negligence!

For a real-world example of what this could look like, imagine you own a janitorial service that serves commercial buildings. The property management of one of your buildings requires you to indemnify them for “any and all occurrences” in your service contract. Later, a fire breaks out that was unrelated to your services, however, your company is left with the bill for damages because of that indemnification. This sounds bogus, but this situation has actually happened, and the janitorial service was legally liable due to that contract!

While it sounds unfair to be left footing the bill for something you’re not responsible for, you may technically be OK – if your general liability insurance is broad enough and does, in fact, extend protection to other parties. However, if your insurance contains limitations or exclusions that preclude this type of coverage, you will be on your own for any liability and damages. For this reason, it is vital that you carefully read every contract you are negotiating and make sure you thoroughly grasp its implications before you sign.

It’s not uncommon for contracts to require one party to add the other as an additional named insured, alone, or in addition to, indemnification. If you do nothing else, the one thing you should do each and every time you sign a contract that even hints at indemnification is to ask your insurance agent to review it and point out where your uncovered risks may be. It’s also a good idea to consult a lawyer for the same reason. These steps will cost a little extra upfront, but you will know where you may be exposed to liability and then be able to take the steps to cover those risks—or to renegotiate the contract with more favorable terms before you sign it!

Here are some suggestions to consider before you sign any contract that asks for indemnity and/or naming additional insureds:

– Negotiate to remove or revise the contract so that you agree to be responsible only for your negligence, not that of the other party.

– If you cannot achieve that, try to negotiate your responsibility to only cases when both parties are jointly negligent.

– Ask for the request for additional named insured status to be removed.

– If the additional named insured is non-negotiable, ask for the contract to specify the additional insured will not be covered for their sole negligence (i.e. your party had no part in the negligence).

– Consult your insurance agent to learn if it would benefit you to have an owner’s and contractors protective liability (OCP) insurance policy satisfy the requirements of your contract, instead of adding the other party to your general liability insurance.


When negotiating these terms, you may need to be willing to give something up on your end – price, for example – in order to get the indemnification portion to your liking. The other party may have greater bargaining power but this does not change the fact that only you can look out for your own best interests when it comes to negotiating a contract.

While we always encourage you to deal in good faith and expect the same from other parties, it’s essential to know the dangers of signing a contract that indemnifies the other party. Assuming responsibility for the sole negligence of another can erode your insurance limits, adversely impact your liability insurance loss experience, increase your liability insurance premiums, and even create a reason for your insurance company to deny renewal in the future.

Our goal is to empower our clients with information that helps them to make well-informed decisions before agreeing to contractual terms that could result in unknown exposures to uncovered financial risks.

If you would like us to review a contract to identify exposed risks and provide options on how you can address these risks, contact us today.

Check your protection before a disaster strikes

With fires, floods, earthquakes, and windstorms happening across the country, it’s a good time to check your coverage. The extreme climate changes we’re all experiencing might suggest an adjustment in your coverage is warranted. Are your policies ready to respond the way you would want them to? UWIB’s service team can help you find out fast.

The US is experiencing record-high temperatures and we expect many of the Western states to continue to be under excessive heat and other warnings through October. And what about the possibility of another extreme winter season?

Whether you are a current client of UWIB, or not, we would like to offer you a quick and free policy checkup and make sure you’re covered for the potential risks Mother Nature may bring you.

Considering Earthquake Insurance? We can give you an instant quote. Even if you don’t live in a traditional earthquake zone, they are becoming more common around the United States and it may be worth looking into the cost to protect your property.

Here are some additional resources to help keep disaster preparedness at the top of your mind. With everything else happening in your world right now, a little preparation can go a long way towards preventing even more disruption to your daily life and business.  

Prepare for Fire Season (PDF) 

Emergency Supply Checklist (PDF) 

QuakeSmart Toolkit (PDF) 


Click here to set up your free and easy policy checkup.

Is your business ready for the next pandemic?

Scientists (and Bill Gates) have been warning us about the risk of a large-scale pandemic for quite some time. If you weren’t fully aware of the impact such an outbreak could have on business, you certainly are now. According to a June 2020 report by The World Bank, the world is predicted to see at least a 5.2% contraction in GDP this year.

Pandemic Insurance, once a relatively unknown idea with little demand, is now something most businesses are at least interested in learning more about.

Pandemic Insurance Coverage is Available Here


We are excited to announce our ability to offer a new coverage: Pandemic Protector.

Pandemic Protector provides “non-damage business interruption insurance” for loss of gross profit due to an epidemic and or pandemic outbreak.

The coverage design lends itself to companies of all sectors and sizes and is particularly well suited for those working in:

  • – Hospitality
  • – Retail
  • – Manufacturing
  • – Construction and mining
  • – Government


With a starting cost of as little as $35,000 for $1,000,000 in coverage, a customized policy can provide broad coverage with a flexible definition of the “epidemic triggers” to meet your businesses’ unique needs. Companies of almost any size can fit into the Pandemic Protector coverage model.

While this coverage excludes the current COVID-19 pandemic, it does cover future “coronavirus” outbreaks that are not SARS-CoV-2.

If you’re ready to learn more, complete the form below and we’ll be in touch with the information you need to see if Pandemic Protector is a good fit for your business. 


When Wealth Manager Partner with Insurance Risk Advisors, Clients Win

Complete this form to download our guide to the benefits of a Wealth Manager/Insurance Risk Advisor partnership:

A great Wealth Manager does more than just trade stocks on behalf of their clients. Your most valuable clients expect you to be proactively looking for ways to keep their assets safe. Working with a qualified Risk Advisor to make sure your clients have the right insurance products in place can do just that.

We know there are reasons Wealth Advisors hesitate to dive into insurance discussions with their customers and we’re here to help. Download our free guide to learn the top five reasons you should consider partnering with an Insurance Risk Advisor to create even more value for your clients.

Legislative update: California employers, worker’s compensation, and COVID-19

Yesterday we learned that the California Legislature has plans to extend Governor Newsom’s Executive Order related to COVID-19 and worker’s comp claims.

If signed into law, COVID-19 “outbreaks” in places of employment would automatically be eligible for worker’s compensation claims. This would apply not only to frontline jobs like doctors and nurses, but to all places of employment.

Here are a few top line takeaways all CA employers need to know:

  • • An “outbreak” would be defined as four or more employees testing positive for COVID-19 within a 2-week period—for workplaces of 100 employees and fewer.
  • • For workplaces over 100 employees, the threshold would be 4% of the workforce within a 2-week period.
  • • If a workplace is shut down by Cal/OSHA, the law will consider this an outbreak and the regulations will apply.

If this legislation is signed into law, it will impact almost every California employer and could drastically increase future worker’s comp premiums.

The law does include some provisions to protect employers who take precautions to prevent the spread of COVID-19 in the workplace, however, it does favor the employee and puts a lot of the burden of proof on employers to present evidence that an employee was not exposed to COVID-19 at work and may have had non-occupational exposure.

Click here to read about the proposed law in greater detail.

If you are concerned about how this law could impact your business, we’ve got worker’s compensation insurance experts who are happy to speak with you.