Have you Developed your Best Contractual Risk Transfer Program?

Contractual risk transfer is a non-insurance contract/agreement between two parties whereby one agrees to indemnify and hold another party harmless for specified actions, inactions, injuries or damages. Risk transfer accomplishes objectives found in both risk financing (finding a source to pay the cost of a claim) and risk control (developing a means to avoid or lessen the cost of a loss).

The ideal use and true purpose of contractual risk transfer is to place the financial burden of a loss on the party best able to control or prevent the incident leading to injury or damage. Presumably, the entity(ies) directly and actively participating in the activity have the best opportunity to prevent or avoid the loss; thus they are contractually required to protect an "innocent" supervising or non-participating party from financial harm following injury or damage.

But how do you know you have the best contractual risk transfer program in place? Confirm with your trusted insurance advisor.

~ Uncle 'D'