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E signature hold harmless indemnity agreement

hey guys grant davis ggi insurance agency got to take the glasses off because of that glare look at that that's pretty bad huh like i said i'm i'm not a video guy i'm an insurance guy so um i'm gonna put my glasses on in a second because i'm gonna share with you indemnity and hold harmless agreements and um and and let's talk about the purpose of an indemnity and hold harmless agreement so you you have a contract to do all this work and you guys do a great job here's what i need done here's how much it's going to cost here's all the specs and everything and you slide in some very weak version by the way i i can't tell you cities municipalities large contractors small ones name me as an additional insured all right what does that even mean you know there's form numbers if you don't get the right form number it's ridiculous to even ask to be named as an additional insurer because it's not going to work it's not going to work unless you have the proper indemnity so so bad analogy i know sorry but i got to use the gun i grew up my dad was a cop all those years so i grew up around guns and i so it's not a big deal to me but for you if it is i am sorry um if it offends you but i could use the gun as an analogy because we all understand a gun has a barrel it has a hammer and it has a trigger trigger okay so what triggers what is the trigger in a construction contract that will trigger insurance to jump in and help what's the trigger indemnity and hold harmless agreement done properly which means properly means it includes the insurance requirements in the indemnity and holds by the way two pages page and a half actually for an indemnity and hold harmless agreement properly done that includes the insurance requirements and by the way the additional insured form numbers and for most product from most anything construction by the way anything but when i'm in my home office that's that ding from my grandmother's uh clock so but anyway um i'm still sheltering at home right anyway um this is my home office gig right here behind me i spent most of my time on the computer reading things but um anyway so what what what triggered this this is the part that's missing okay so most initial insurer not most i'm sorry all additional insured agreements when you read them say as required by written contract so if you're not requiring the form number you're already in trouble but you did say required additional insurance so now you got some pieces of paper that mean nothing okay i and and for me as someone that understands additional insurance and the different form numbers when someone asks for to be named as an additional insurer and doesn't require the form number it just tells me that they took some training somewhere lightly on additional insureds and simply know that they need to ask to be named as an additional insured but they don't understand how that's the trigger to the contract right okay here's the other thing too i have some so i'm sure developers owners of projects the general contractors but it's like a pyramid right i have those guys but mostly i insure subcontractors okay i'm sure a bunch of subcontractors because they're on the jobs that i'm involved in and usually they got questions that their broker can't answer so i'm always available to answer questions and next thing you know they're my clients because i just get it i mean i understand some of this stuff and by the way i'm going to say this i'm going to pick on insurance brokers do you know it takes two weeks to become an insurance broker two weeks i'm just saying you know how long it takes to cut my hair if you want to cut my hair it takes you a year of training to learn how to cut my hair it takes you two weeks to be able to sell you a general liability policy for your construction project i'm sorry i gotta laugh a little bit because it's just funny to me and i'm gonna tell you i know broker's been in business i've been in over 40 years i know brokers in business just as long but i've never read these two pages and if they have they sure don't understand them and let alone everything else that i have to read when i get a project some of the stuff's that thick you know hundreds thousands of pages of times i have to read so anyway this becomes part of of the contract this is the triggering mechanism it is the most important part of the contract if you ever expect insurance to pay a penny okay you see projects wrapped up in cellophane sometimes i there was one the hospital was building like eight stories down the road about 100 miles from here drove by that thing and i was like why was that thing covered in plastic well i found out that they had some construction defect problems while they were building it and it was taken years to solve why does it take years to solve have you ever wondered why it takes so long to solve some of this stuff because because the contract's unclear here's the deal you're not in good hands you're in contract the insurance companies write really good contracts by the way they're very clear i understand them very well i i even even um support um attorneys in litigation and say nope this is what it means and why it means it and i've had him say to me well we'll have to check that out and they check it out and say oh yeah you're right and i said yeah i know i'm right i've been doing this for a long time i'm not an attorney though so you need your attorney and by the way i'm happy to help your attorney um they just give me a call that's it i don't charge anything any i used to when i was younger i used to charge to help attorneys and you know i just they just don't pay very much so i don't charge anymore so i just but happy to help i'm happy to help anyone that wants to get this stuff right so i'm gonna this is an actual one so so remember and by the way this is not for a construction client but it's the same exact form because i if you got you know 500 million dollar building and someone's going to come and touch it they better be insured properly with the proper insurance additional insured hold harmless indemnity agreements and the proper additional insured forms okay so so this is my first point construct uh county cities municipalities you know name is an additional insured and you don't require the form number that just again like i say it just lets me know that someone took a class somewhere and didn't quite get down into it where it got into their core where they really understood it but so there's two types of indemnity agreements though there's type one which says hey you're responsible for everything you sign this i don't care if i do it you do it you're responsible type two is we're responsible each other for whatever we do to the degree we do it um i'm in california so i'll pick on california we used to have both types and then type one agreements went away in residential construction first and then eventually in commercial construction so in california it's only type two and that's all it ever should be anyway but someone needs to read this because it's part of the deal so if you're a subcontractor and you sign an agreement and you send to your insurance company your insurance broker and you say hey i need a certificate of insurance with an additional insured and they don't ask for a copy of the agreement you're in trouble why are you in trouble well here's the deal the contract is that thick you sign it you're responsible for every part of it including contractual transfers so if someone just gets you paid you're happy oh i got paid great i've got you threw one across the plate is what i call it okay and someone didn't catch it didn't catch that you didn't do it right does that relieve you of your obligation absolutely not you're responsible and if your insurance by the way does not respond the way it's supposed to with the proper judicial insured num and there's two of them that i recommend always you have to have two not just even one oh not just the cg 2010 by the way it's 2010 what year there's versions of the 2010. there's like four of them actually five of them i can't even remember i got a book on it so i have to read the book right there's so many versions okay and then you also have the other one you gotta have it in there too okay so so if you're supposed to have those in there and your insurance broker is just trying to get you paid and doesn't understand why they're even in there and they say hey here's an additional insured form pay my client and my client gets paid everyone is happy six years from now something goes wrong the insurance your clients insurance or your insurance as the subcontractor does not respond the way it should have had the forms been done right guess what this indemnity and hold harmless section in here gotcha they just got you you personally and your company and you pers by the way um you say oh i'm a corporation okay i'm an llc great okay are you the sole member what's an alter ego have you ever heard of an alter ego well an alter ego is what pierces the corporate veil and the llc veil if you treat your llc or your corporation as just an alter another part of you most subcontractors smaller subcontractors but most even some good size ones i know it's an alter ego it's not providing any protection you've got no protection because you're a corporation or an llc you think you do i'm glad you think that but it's just not the way it's going to hit the pavement because you signed a contract that had very specific language in it okay and by the way for you developers and your and your general contractors should you have to know all of this no you got a broker an insurance broker okay so you get your certificates you start to collect them guess what send them to your broker that's what i tell my clients to do let me look at them because guess what it sounds like a lot of work right you're going to send me 50 pages and really the work is going to be for me just to get to the page that says here here you know gives me the form numbers i look at the form numbers and glance up yep that's the form there's the form numbers i'm in and out of that in 30 seconds this is what i do i mean that's why my screens are so big well that i'm almost 60. so my screens are that big so i can see with my glasses but that's what i do i i read most the day i read by the way that's what's up right now this is an insurance agreement right here this is what's up on this screen you can't see it very well but that's what's up i'm just telling you so that that's what has to happen so let's let's get into the body of this and forgive the glare and kind of look away from the light so it doesn't glare so much so prior to commencement of any work at and this is my client so i'm not going to say it so you would insert you any and all contractors and service providers must include the following in their contract or agreements and add this to them so this is designed for unit owners or somebody else to say hey look here's what's happening okay israel it is required by written contract that all contractors or subcontractors or service providers of any tier and until completion and final acceptance of the work plus the state of and i mean i'll say california the state of california is period of repose as stated in california code number and i give it all in there for their work the contractor subcontractor or service provider shall at their sole expense maintain the following insurance on behalf and furnished to the owner of any and then this this is for an hoa any unit and directly to and then my client's name certificates of insurance evidencing same reflecting the effective date shown above the term contractor as used that as used in this insurance rider shall mean and include subcontractors of every tier as well as service providers so this this this is a really broad broad one right we're catching everybody and why wouldn't you want to why do you want anybody stepping foot on your project that doesn't provide you with proper insurance additional insured forms why would you do it because here's the deal they're usually your friends right and your friends you guys go out to dinner your families enjoy each other's company and all of a sudden something goes wrong and now you're suing each other and it's a year because you didn't get this clearly stated and so what that year is going back and forth to court trying to figure out what the heck it means ask your attorney that's what they're doing they're just trying to define oh this means this oh wait they bring in an expert says means one thing another expert says it means something else and guess what the insurance contract is seldom questioned because it's written right it's this stuff that's not so get your attorney to do it we'll give you a copy of this but it's sample template i i tell no don't use my stuff this is an example to show your attorney and i'm happy to talk to your attorney about why i have this or that and what and by the way you've seen indemnity and hold harmless agreements and then later on you see the insurance requirements and later on the additional insured requirements that's nice good better than not having them i guess i'm saying i guess but the proper way to do it is you put it all together the indemnity hold harmless insurance and additional insurer are all one piece it's all one piece it all fits together there's a reason for that ask your attorney why that would be and then think about it better yet ask your broker why that would be first and then when he can't answer it or she can't answer it then you ask your attorney and then you realize maybe you want to do business with us because we we know this stuff sorry my little commercial in there i know i said it was just training but i got to throw a commercial in there every once in a while so anyway uh and then we go down we start with workers comp and we name it all okay including a waiver segregation in favor of and it's gonna be you if you're the general contractor and why is there a waiver of segregation it's because you're saying hey look in the indemnity part you're responsible for safety of your people so someone gets hurt on the job site it's never our fault so you're not going to segregate segregate means you go after the insurance company pays the bill and then goes after the person that's responsible for it we're going to waive that we're going to come down here we're going to name the commercial general liability with bodily you know liability limits of 1 million per occurrence 2 million aggregate garbage low limit garbage low limit might as well not even have insurance what's a million dollars today think of someone thirty thousand dollars a year 35 years old you in california it's the right to not work state so any injury at all pretty much they're permanently disabled you owe them their income until they're 65 years old so you get a discount that by current interest rate which is what a half a point today this is 2020 and um i'm sorry 2020 and so you know it's like a half a point if if that you can get on a guaranteed fund so that's all it's discounted by but it's also got to be inflated inflation is worse inflation is about five percent so you're looking at about a million and a half loss of income just for one person being injured and that doesn't that's just income that doesn't count pain suffering so there's about three million dollar loss just you know whoa there you go that just shows you that i am not a technical person i am an insurance person so i just kicked my tripod sorry about that guys anyway um so and then we go on broad form contractual completed operations broad form property personal advertising independent contractors endorsements furnished reflecting the inclusion of the interest of the owner construction manager general contractor contractor and then here we name my client they're officers directors partners representatives agents employees and naming each each as an additional insured using the cg 2010 and then the form number with the cg and then the next one and the form number there's two of them in here right and the reason for that is it takes two it just does the way they've written these additional insured forms now you've got to have two and you've got to have a very specific two and by the way they have version dates at the end of them so so let's pick on the cg 2010 the most common and you heard a cg 2010 1185 or equivalent number one there is no equivalent form there's not a equivalent form it takes two forms to be equivalent to the 1185 and it's not quite equivalent it's like ninety percent there okay and i can tell you why that's a different discussion that'll take me a half an hour just to explain what that is but i'm just telling you that if you're asking for oh i want to be named as an additional insured and you don't give the form numbers it's not going to work the way you expect it to work it's just not going to happen okay and cities municipalities and even large companies i keep saying it i i get these things and says name is an additional insurer without a phone number and or i have one i had a property management company the other day cracked me up calls on the phone and says hey we need to be named as an additional insurer i said okay where's the contract oh we're not gonna put that in the contract we're not gonna write it i said well here's your problem all additional insured forms start with as required by written contract and i said in what form number do you want well they're just leasing this place and we need to be named as an additional insurer i said okay i'll do it but i'm going to have you sign a waiver because you can give me a contract and i'll have my client sign one too so you know we go ahead and do it we're not hard people we'll do it but it's like it's wrong and we'll explain why it's wrong but they didn't care property manager didn't care at all in this case it was about a month ago just didn't care just wanted to get you know i just had to get an additional insured and had no idea what he was even asking for by the way so i just throw that out there to you so anyway and then we come down and we start to you know go down primary non-contributory on and on it goes you know there's a lot of stuff in it then we go commercial auto umbrella you gotta have an umbrella or excess and it's gotta you know this one says five million minimum um you know five is even a little low for a lot of stuff nowadays five is a little low tens a little bit better 20 30. i've got i got some 100 200 million dollar access policies on these things that's a lot of money i know but you know if you're you're building a 300 million dollar project yeah you might need a little bit more than a million dollars is what i'm saying you know something goes wrong right commercial auto even has to be included in here oh and by the way i'm going back to workers comp we do not allow independent contractors so i i don't need to have workers comp i'm my only employee i do all my work myself okay good so you're so you heard of the drowning victim syndrome you know they pull you down okay so if i'm a tile setter and i do all the work myself i've got no employees i i don't have to have workers compensation i get injured on your job site i'm really hurt where's my sole source of money i got no workers comp i gotta sue you i'm sorry i i just have to sue you now the good news is is if you use this kind of an indemnity clause like we have right here indemnity and hold harmless clause we'll flip that back to them and say um yes you're not screwing us here's why and you're responsible and there it is and by the way think of employees so now you got a guy got a crew out there i got one crew on one of my job sites one time there's like 500 people a lot of people people get injured okay hey well i got injured on your property the employee is not obligated by these contracts they didn't sign them they're employees they got workers comp but they're on your property first party liability claim and by the way a million dollars is that what you have why they're doing construction work i hope not because let me tell you any employee that gets injured and can't work again you're looking at at least three million dollars if not more and that's for the low paid employees get someone that's higher paid and or really hurt you you can go five six seven million dollars in a heartbeat okay so anyway owners contractors protective is something we'll talk about which is what you got to have when you have somebody people working but that being said if you have the right indemnity and hold harmless agreements with the right waivers of segregation and all this is done properly and the right additional insured forms all of that it's called action over or third party action over when an employee of one of your subcontractors runs a first party suit against you the owner of the building or the property or the project right you've got a first party suit you can flip it right back right back to the the owner of the business the the subcontractor because that employee now can can sue you but it flips by with by contract it flips back because why that employee can sue you and there's no no you can't contract out of that one because that's an employee but the employee's employer sign this and if they do it if you do this the right way it flips right back to them right so the idea behind all of this is we want to get back to this indemnity and hold harmless agreement which by the way a good one is only like you see you see them in your contracts right couple paragraphs that's all it is so i'm just telling you in a page and a half you could do this right you can do this right we're going to provide a sample template of this it won't have all the detail in it um but it will have contact information it will give you the sample template you need to go over it with your attorney i'm not an attorney i don't claim to be an attorney i do claim to be an expert witness um but which sounds better than it is that means i was paid once or twice to give my opinion that's all it means but that being said i qualified you as an expert witness right what really qualifies me as an expert witness is i know more about this than anyone you've ever talked to including most attorneys um most risk managers most anyone else and my little commercial if you're not getting this kind of by the way this is just one watch this whole series this is just one one little piece if this one little piece right here is probably the most important part of a construction contract and i get it my staff gets it we got a whole team of people at gdi to get it you don't even need me you just called gdi and someone to help you with this stuff we'll help you get this right if you're our client so ask yourself who's your insurance broker i guess and by the way insurance cost reduction starts with this i can get you premium credits if all this is done right if i can show if i but by the way i i have a cement contractor i got a copy of their their subcontract agreement made some changes to it submitted it to the insurance company guess what for the general liability guess what 10 credit just for me editing a couple of things premium went down insurance cost reduction if that's important to you insurance cost reduction you might want to do business with somebody that gets all this stuff because this is how you do it you reduce risk is how you reduce the cost of your insurance by reducing risk in construction a lot of that is contractual hey thanks a lot um like i say i'm not a tech guy so i'm gonna have to press a button thank you so much guys