- Marsh & McLennan Agency, known locally as Insurance Associates - https://insassoc.com -

Contractual Risk Transfer


Contractual Risk Transfer — Friend or Foe?  The legal answer:  It depends.  It is usually the friend of the stronger party in a contract, who is frequently in a position to dictate terms that are often heavy handed—as far as the law will allow, and sometimes more than that.

But sometimes the onerous terms in a contract can be struck or mitigated.  My personal success rate in getting undesirable terms removed or softened is about 50%. But you have to ask, and it sometimes depends on one’s approach.

Most of the time we get to review a client contract before it gets signed.  Reviewing after it’s signed is somewhat “academic,” since it’s not likely that any burdensome language will be removed.  At that point we can only advise the client of what it might mean for them in the event of a loss.

How a loss is settled by an insurance company often depends on what the parties agreed to in a lease or contract. This is something that many business people don’t think much about, especially if they have never had a claim.  Frequent areas of concern include:

General Liability


Equipment Rental

Bottom line:   Read contracts carefully before signing, enlisting your insurance professional and attorney when in doubt, and check your insurance policies to make sure your coverage will address what you have agreed to in your various contracts.

Information about the Author:  Mike Cash has been in the insurance industry for almost 40 years, as an insurance company underwriter and a large accounts manager with national & independently owned insurance brokers.

To learn more about Contractual Risk Transfer please contact the author:

Michael Cash, CIC
Senior Account Executive
Marsh & McLennan Agency, known locally as Insurance Associates Company, Inc.
(703) 352-6490
mcash@insassoc.com [1]