Are you signing on to unnecessary risks?
Successful individuals and families lead fast-paced, dynamic lives. Part of that lifestyle may include situations such as undertaking major home renovations, hosting elaborate events at luxury venues and loaning treasured artworks to galleries, museums or traveling exhibitions.
The problem is, any of these activities can expose you to unnecessary risks in a seemingly mundane moment—just signing a contractual agreement, for instance.
That’s why a guiding principle of prudent risk management is ensuring that appropriate responsibility and liability is specifically delineated before you enter into any legal agreement. Is the service provider taking responsibility for his or her actions? Does this individual have proper insurance in place to protect against unforeseen damage to your property or to the well-being of others?
Any contract you get involved in should describe those responsibilities and specify the required insurance.
Whether you’re doing extensive renovation or an all-new construction project, you will be asked to sign an agreement with the general contractor (GC) responsible for completing the work and hiring subcontractors. That agreement should require the GC to share his or her certificates of insurance for general liability, umbrella liability and workers’ compensation insurance.
The liability limits on these agreements should be high enough to cover damage to, or the total loss of, your home caused by the contractor’s negligence. Your name and the name of the entity that owns the property (if different) should be added as an additional insured on the contractor’s policy before the work begins. You don’t want to be held responsible for an injury that occurs during construction because a contractor was negligent and didn’t carry adequate insurance.
When you are hosting a wedding or any type of celebration, similar advice applies when you sign contracts with venues, catering/bartending companies, valet parking services and entertainers. Before signing, again, ask for certificates of insurance for these parties’ general/umbrella liability and workers’ compensation coverage, and ask to be named as an additional insured on the contractor’s liability coverages for the day of the event.
Remember that you are the customer in this relationship, and vendors should comply if they value your business. You don’t want to be held legally liable if the caterer’s negligence causes your guests to get food poisoning, for example.
Packing and shipping are the leading causes of losses to art, so you need to be sure that competent, experienced firms are handling any pieces you loan.
When negotiating the loan of a valuable piece of art to a gallery, museum or traveling exhibition, therefore, make sure that the loan contract stipulates the process by which the item will be cared for from the time it leaves your home to the time it returns.
The gallery, museum or traveling exhibition should carry adequate insurance for the piece at its fair market value and stipulate in the contract that the borrower will be liable for loss or damage whether or not this museum or gallery has received insurance proceeds.
This is the most comprehensive way to assure that your piece is protected, even if it remains on your insurance during the time it’s on loan. If you have questions about any contracts, such as those cited in the examples above, involve your insurance broker before you sign. Knowledgeable review and guidance can ensure that your interests are properly protected and that those you are doing business with take responsibility for their actions.