Limit your risk in contracts with help from new ATSSA group

By Michael Capell, Brown & Brown

The overreaching contractual obligation to assume responsibility for another party beyond the extent of your own negligence or willful misconduct is unreasonable and a clear and present danger to the roadway safety infrastructure industry.

I recently listened while an ATSSA member shared an experience, recounting the unsettling details of a lawsuit that altogether changed his approach to every project.  For this member, had it not been for a negotiated settlement in exchange for a full release, a jury award would have easily exceeded the company’s available limits of liability insurance and forced a sell-off of corporate assets. The hard-to-swallow reality of the matter was that his involvement was simply a consequence of a far-reaching contractual obligation.

The business survived, with the experience serving as an endless reminder to never again roll over for blanket contractual risk shifting. This member now fires back, many times successfully negotiating a narrowed responsibility that is fairly and appropriately aligned with his company’s presence on a project, something previously thought unachievable.

These circumstances are all too familiar and place high priority for the continued drive for awareness and education of the issues, contract review protocols and a push for legislative changes.

ATSSA’s 2023 Convention & Traffic Expo in Phoenix will include a panel-style education session targeting awareness, instruction and a path for solutions to the issue.

Before then, the Association will run a series of blogs and hold a Nov. 8 webinar on the topic.

The Nov. 8 webinar, “Leveling the playing field for contractual liability,” will be held at 2 p.m. ET and is free for ATSSA members. It will include a panel discussion including folks from the insurance, legal and roadway safety fields including Doug Dolinar and Mary Beth Applegate of Guidemark Inc., Whitney Remmes of RoadSafe Traffic Systems Inc., Greg Stefan of Arch Insurance, Todd Welch of Charter Partners and me. Registration is now open.

For members new to contract review protocol, the process is an evaluation impacting your final decision for action on a contract.  To evaluate, we must have criteria. Here the issues are lopsided contractual provisions favoring the drafter—typically, the general contractor—through excessively burdensome obligations imposed on the subcontractor.

From the standpoint of the issues at hand, we center on additional insured, indemnification, waiver of subrogation and scope of work. We will define the language, provide clarity on how it can impact you and offer suggestions for improving your position.

In addition to helping reduce exposure to costly claims, these improvements can increase the availability of insurance to you and influence the cost and structure of your specific liability insuring program.  A change in the law in states that currently do not have anti-indemnification statutes, or that carry only partial application, holds potential to improve the overall insurance marketplace environment for the roadway safety infrastructure industry.

Our goal in these blogs and the webinar is to lay the framework for an energized and impactful panel session in Phoenix.  The panel session will provide an opportunity for you to ask questions and offer details on how to protect your business from the contractually assumed risks that are more appropriately left in the hands of the general contractor or upstream parties.

This issue is critically important for this industry and our goal is the security and profitability of ATSSA members.

Register now for the Nov. 8 webinar, watch for the next blog in September and get ready for the education session in Phoenix at ATSSA’s 53rd Annual Convention & Traffic Expo, Feb. 17-21.

Michael Capell serves as vice president of commercial practice with Brown & Brown, an insurance brokerage in Bethlehem, Pa.

NOTE: Information provided here is not legal advice. Rather, all information, content and references are for general informational purposes only.