August 8, 2011

 

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Question

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Hi Ken,

     I had an incident a while back and I will need to put your contract to

the test.

    We were doing an installation of a fire alarm in a mercantile space

and an employee was involved in an accident where a customer was injured.

Fortunately it was not a severe injury. The customer is now starting their

lawsuit. The owner of the business, with whom we had a direct contract to

install the system, has been named in this suit.

     We have not been named yet, I am sure that is coming.

    My question is this, what protection will our contract

provide us? We use your standard installation contract. Does it not protect us

from legal costs and loss?

Look forward to your comments.

Rob

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Answer

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    The contract will protect you.  First, your subscriber was required, by contract, to obtain insurance covering this type of incident, and name you as an additional insured.  If you are dragged into the lawsuit ask for the policy.

    Second, your subscriber is required to indemnify you against this type of claim, and you can demand indemnity in the event you are names in the suit. 

    There are a few things you should do now, even though you are not in the action.  First, notify your insurance carrier of the incident and the possible claim.  Second, if you are brought into the lawsuit most likely it will be the subscriber bringing you in as a third party defendant.  If you hear from the subscriber's insurance carrier you need to let them know immediately that you have an indemnity contract and that the same contract  has an insurance procurement clause.  Your goal should be to keep from getting sued and having to come up with the deductible.

    I am confident the Standard Form Contract will hold up.  Hope you were using the Fire All in One.   Let me know how things go.