Indemnity, subrogation, insurance
Jun 1, 2002 12:00 PM
TRUCKING companies have to deal with legal issues regularly, including indemnity, subrogation, and insurance. Whatever the issues, it is essential for trucking company decision makers to understand the issues and how they affect one another, said James Bryan of Adams, Kleemeier, Hagan, Hannah & Fouts, Greensboro, North Carolina.
“The primary purpose of an indemnity clause is to shift risks from one party to the other,” he said. “It is an all-or-nothing proposition, you retain all the liability or give it all to the other party. By stating the allocation of liability when entering into a contract, the parties are in a better position to anticipate their responsibilities and make prudent business decisions.”
He and Steve Niswander of Groendyke Transport, Enid, Oklahoma, discussed the challenges at the National Tank Truck Carriers Safety Council Seminar April 17 and April 18 at Las Vegas, Nevada.
Niswander warned that legal decisions should not be made by managers who are not familiar with the issues. He also noted that drivers should not sign agreements without company approval. Shipper contracts should be reviewed for legal content by those who are qualified to make decisions. “There are legal nuisances you need to understand,” he said.
Another legal issue carriers deal with is subrogation. “Subrogation inevitably works its way into nearly every claim involving trucking accidents and losses,” Bryan said.
He added that the negotiation of trucking agreements usually involves a decision on whether to agree to waive subrogation rights of the insurer. “Knowing the significance of the waiver issue can go a long way toward reducing surprises when claims arise later on,” Bryan said.
On the subject of contract negotiations that include naming an additional insured on another party's insurance policies, Bryan termed the situation a “loaded proposition.
“With little to no extra premium charged for it, a party may be tempted to comply with the request. If you agree in the contract to procure additional insured status for the other party, when a claim does occur later on, you should prepare yourself for much uncertainty.”
To deal with the complicated legal issues, Niswander suggested companies organize a team composed of carrier representatives, attorneys, and insurance agents to develop company strategies.
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