Professional Indemnity Insurance - Client "named as additionally insured"?

[fatmcgav]

Afternoon all

As previously posted on here, I'm in the process of agreeing terms with a US IT Co to act as a sub-contractor on one of their upcoming projects.

They've provided me with a 'Subcontracting Agreement' which they've asked me to review and sign.
Most of it looks like fairly standard stuff - Services, Fees and Billing, Termination, Ownership etc etc...

The only one that's stood out as to me is the 'Insurance' section.
The section is worded as follows:

11. Insurance. Prior to commencing any Services, Contractor shall provide CompanyX with a Certificate of Insurance satisfactory to
CompanyX. The Certificate of Insurance shall reflect, at a minimum, the following policies: (a) Professional Liability (errors and
omissions) at $1,000,000 per occurrence and $2,000,000 aggregate. CompanyX shall be named as an additional insured under
the policies. Contractor waives all rights of recovery against CompanyX and its affiliates for any loss or damage covered by the
Commercial General Liability Insurance policies. The complete or partial failure of Contractor’s insurance carrier to fully protect
and indemnify CompanyX or the inadequacy of the insurance coverage shall not in any way lessen or affect the obligations of
Contractor to indemnify CompanyX under Section 10.

I'm happy enough with taking out PI insurance to cover my Ltd Co. to the tune of £1m through QDOS; however what I'm not sure on is: CompanyX shall be named as an additional insured under the policies.

This doesn't sound like the normal way of doing it to me. I've had a search around the QDOS site and haven't been able to find out any info on the subject, so thought I'd ask what peoples thoughts were...

I'm also planning on giving QDOS a call when I have an opportunity to see what their view is.

Cheers in advance for any responses.

Regards
Gavin

[donjuan75]

Odd

That does look strange. They're asking for your company insurance policy to cover them also, it seems. Speak to QDOS asap. They have a livechat thingy once you're signed in, which is perfect. I sorted out a contract review without speaking to anyone.

[captainham]

It's acceptable for a clause like the following to be mentioned in the contract:

The [YourCo] will notify the insurers of the Company's interest and will cause the interest to be noted on the insurance policy.

Not sure about the precise wording of your clause though...

[fatmcgav]

Cheers for the responses both.

Got onto a Live chat session with Hannah @ Qdos, and she was able to answer my questions.

Long and short is that Qdos are not able to name clients on the schedules, but they do offer an indemnity to principal clause, which was described as:

It sets out that the insurer will pay the policyholder’s client (the ‘principal’) directly in the event of a claim. Without this clause, the insurer would pay the policyholder in the event of a claim, and the policyholder would subsequently pay the principal. It does not affect the policy in any other way.

So now to go back to the Client and see if that will satisfy their requirements.

Cheers again

Gav

[Taita]

Afternoon all

As previously posted on here, I'm in the process of agreeing terms with a US IT Co to act as a sub-contractor on one of their upcoming projects.

They've provided me with a 'Subcontracting Agreement' which they've asked me to review and sign.
Most of it looks like fairly standard stuff - Services, Fees and Billing, Termination, Ownership etc etc...

The only one that's stood out as to me is the 'Insurance' section.
The section is worded as follows:


I'm happy enough with taking out PI insurance to cover my Ltd Co. to the tune of £1m through QDOS; however what I'm not sure on is: CompanyX shall be named as an additional insured under the policies.

This doesn't sound like the normal way of doing it to me. I've had a search around the QDOS site and haven't been able to find out any info on the subject, so thought I'd ask what peoples thoughts were...

I'm also planning on giving QDOS a call when I have an opportunity to see what their view is.

Cheers in advance for any responses.

Regards
Gavin

Not seen this in PI but it is a common enough insurance requirement, e.g, mortgage lenders/buildings insurance. However, please make absolutely sure that your PI covers work outside of Europe or non-European clients.

[fatmcgav]

Not seen this in PI but it is a common enough insurance requirement, e.g, mortgage lenders/buildings insurance. However, please make absolutely sure that your PI covers work outside of Europe or non-European clients.

Taita

Good point.. Will ask that question of Qdos

Cheers
Gav

[fatmcgav]

Ok, I asked the question of Qdos as-to whether the policy would cover me with US clients, and they said yes, as long as the contract is under UK jurisdiction.

Now I think that is probably going to be a challenge as the client is engaging me in a subcontracting agreement, and all the wording thus far has suggested that the agreement is covered by US governing law...

Suspect this change is going to be a hard sell...

Has anyone experienced anything similar?

Cheers
Gavin

[jamesbrown]

Yes, I have experience of this, and my experience is that you have next to no chance of agreeing anything with a US client other than a US state for the jurisdiction and governing law (note that these two things are different). Unfortunately, insurance for the US market (based on US jurisdiction and governing law) can be prohibitively expensive and I've personally spent quite a lot of time and effort finding something suitable for my line of work (which is not IT). If you're a member of PCG (and you should be), take a look at the forum over there and you'll find a few options to explore. For example, I believe Randell Dorling offers a discount on their PI insurance through PCG for the US market, but it requires that you are a PCG member. That being said, I do not have any of my clients named as additionally insured on my policies, and I haven't come across that clause, but a lot of stuff for the US market doesn't translate directly.

[fatmcgav]

Yes, I have experience of this, and my experience is that you have next to no chance of agreeing anything with a US client other than a US state for the jurisdiction and governing law (note that these two things are different). Unfortunately, insurance for the US market (based on US jurisdiction and governing law) can be prohibitively expensive and I've personally spent quite a lot of time and effort finding something suitable for my line of work (which is not IT). If you're a member of PCG (and you should be), take a look at the forum over there and you'll find a few options to explore. For example, I believe Randell Dorling offers a discount on their PI insurance through PCG for the US market, but it requires that you are a PCG member. That being said, I do not have any of my clients named as additionally insured on my policies, and I haven't come across that clause, but a lot of stuff for the US market doesn't translate directly.

James

Cheers for the response, and for the suggestion of Randell Dorling.
I'm not a member of PCG yet, but it's on my list to sort out.

Interestingly, running through an online quote on the Randell Dorling site, it's about 25% more expensive to add US cover, so not too bad...

I'm trying to get my client to drop the 'additionally named' clause, so hopefully that will simplify things slightly...

Cheers again
Gav

[jamesbrown]

James

Cheers for the response, and for the suggestion of Randell Dorling.
I'm not a member of PCG yet, but it's on my list to sort out.

Interestingly, running through an online quote on the Randell Dorling site, it's about 25% more expensive to add US cover, so not too bad...

I'm trying to get my client to drop the 'additionally named' clause, so hopefully that will simplify things slightly...

Cheers again
Gav

No problem. Just make sure you talk to the insurance co before purchasing the cover and read the fine print of the model agreement very carefully to ensure that the contract wording does indeed meet your needs (i.e. that it supports US governing law and jurisdiction among other things). As the US market has a reputation for being highly litigious (not something I've personally experienced though), it could be a very expensive mistake to have inadequate or invalid coverage. Depending on your line of work, the additional costs of cover for the US market can be anything from manageable to pretty shocking, but being in IT is probably an advantage. I suspect you could struggle with having your client as additionally named and you may need bespoke (i.e. expensive) coverage for that scenario, if indeed it's possible, but I'm no expert on insurance.