| Presentation 2:
Harmonizing Risk Transfer In Commercial Agreements and Insurance Policies
On a daily basis nearly every company enters into some form of contractual risk transfer arrangement. For example, a company buying goods may seek to transfer its risk of product defects to the seller or manufacturer, a general contractor may seek to transfer its risk of personal injury and property damage to a subcontractor, or a non-operator owner of an oil rig may seek indemnification from the owner-operator – in each of these relationships there is a desire to transfer risk from one commercial party to another. To further effectuate risk transfer, commercial policyholders frequently seek to extend their insurance to provide additional insured coverage to the entities whose risk they have agreed to assume. For example, a seller who agrees to indemnify a purchaser for product liability also may agree to add the purchaser as an additional insured under an insurance policy. In each of these ways, and many others, commercial parties, on a daily basis, enter into risk transfer arrangements as a means to define the responsibilities of the parties. Far too often, however, the parties’ intent is frustrated and the risk is not transferred as desired. Through this program, we will discuss the various risk transfer mechanisms that can be utilized in commercial agreements and in insurance policies from the perspectives of companies on both sides of the risk transfer equation. We also will discuss how to harmonize the various complex provisions used to transfer risk in commercial agreements and highlight potential pitfalls that can cause risk not to be transferred as intended. This program should be of great interest to risk managers and in-house lawyers practicing on the transactional or litigation side.