It’s no secret winter weather creates more opportunity for liability claims, especially slips and falls. If you own a business, commercial building, or manage property, contracting with a reputable snow removal contractor to clear your driveways and walkways can help eliminate many of these risks.
Before the snow flies, a valid written contract is a must to provide the possibility to transfer liability to the contractor. There are five requirements you should address in the contract to assure you are properly protected.
- Define the duties of the contractor. The contract should make clear what is expected from the contractor. The following are some items that should be addressed:
- What areas of the property the contractor is responsible for, i.e. parking lots, driveways, walkways, steps, porches, mailbox areas.
- When is the contractor to respond? Typically this is when 3 inches or more of snow has accumulated depending on the region.
- Is the contractor responsible for sanding or salting? When is the contractor required to sand and salt? What type of salt should be used? Is the salt non-toxic and pet friendly?
- Insurance requirements. The contract should clearly note that the contractor needs to have general liability and Workers’ Compensation coverage in place with an insurance company licensed to do business in your state that has an AM Best rating of at least A-. The contract should specify what general liability limits are required. This depends on the size of the contractor and how many properties they are responsible for, but at least $1 million per occurrence should be required.
- Additional Insured status. The contract needs to require that you are listed as an additional insured on the contractor’s policy. A certificate of insurance is not enough. More and more insurance carriers are only providing additional insured status if required in a valid written contract.
- Defense and Indemnity. This requirement makes it clear that if the contractor is liable for a claim and a claim or lawsuit is made against you, the contractor must defend you against the claim and, if warranted, settle the claim. It should be made clear that most states will not allow you to contract away your own liability, so it’s still a good idea to carry your own liability policy.
- Primary and non-contributory. A typical Defense and Indemnity requirement does not make it clear if the defense and indemnity provided by the contractor is the primary coverage or extra coverage over that provided by the property owner/manager. This requirement makes it clear that the contractor’s policy is primary and your policy is not to contribute to the defense and indemnification of a claim or lawsuit.
Now a little disclaimer of my own: When negotiating contractual terms, it’s always a good idea to have them reviewed by your attorney.