Contractual Risk Transfer
Ruth A. Unks, ARM, Risk Manager
Maricopa County Community College District
(480) 731-8879
ruth.unks@domail.maricopa.edu
What Are We Going To Discuss?
1. What is risk management?
2. Risk retention vs. risk transfer
3. Methods of risk transfer
Indemnification/Insurance
4. Certificates of Insurance
5. Additional insured status
6. Contractual risk transfer tools
What Is Risk Management?
1. What can go wrong? (Risk identification)
2. What can we do so it doesn’t go wrong? (Risk
control)
3. How do we pay for it if it does go wrong? (Risk
financing)
Risk Financing
■ Risk retention: Using funds from within the
organization to pay for losses.
■ Risk transfer: Using funds from outside the
organization to pay for losses
– Insurance
– Contractual
• Indemnification
Risk Transfer: Indemnification
■
Indemnification
– Contractor assumes all liability, caused in whole or
in part, from Contractor’s negligence arising out of
the project.
– Contractor should show evidence of ability to pay
for obligations assumed in contract
• Financial assets
• Insurance (Certificate of Insurance)
What Is A Certificate Of
Insurance?
■ Form that gives evidence of the insured’s financial
ability (via an insurance policy) to respond to a claim.
■
No coverage benefits are afforded to the certificate
holder.
■ Merely confirms that the subject company carries
insurance.
■
Information shows only what coverages apply as of
the date of the certificate.
When Are Certificates Needed?
■ When another party performs services on our behalf,
has our property in their care, custody, and control,
and/or controls or directs our employees.
■ Dollar value of purchase order or contract is not
reflective of the risk/exposure.
Who Should Provide The
Certificate?
■ Advise vendor/contractor of our insurance
requirements.
■ Other party’s insurance agent, broker, or risk
management department will actually issue
certificate.
What Should A Certificate
Include?
■ Name of insurance companies issuing policies.
■ Named insured
■ Address of named ins