An essential part of any Insurance program is the effective use of Risk Management and loss control strategies to mitigate exposure to loss and improve the risk profile of the client. For mining companies, the proper implementation of these strategies can help save them large costs in the long term.
Here are some quick facts about risk transferring for mining companies:
A Quick Guide:
Risks can be transferred to contractors, subcontractors, suppliers, vendors, customers and joint venture partners. When written contracts are negotiated it is common for one party to assume the liabilities of another party.
Savvy business managers appreciate the benefit of transferring potential liabilities to others and negotiating contracts to their own advantage. Agreeing to assume someone else’s liability can be costly as you may be forced to settle claims that would otherwise not be your responsibility.
You should also be careful to ensure that your own policies cover the contractual liabilities that you have assumed. Alternatively you may impose similar conditions on the parties you are contracted with and it is important to confirm they have adequate insurance coverage to protect themselves from such risks.
You must also be careful not to incur unreasonable insurance costs that your contracted parties try to pass back to you.
Typical Risk Transfer Considerations:
- Insurance: What type of policies are needed, are there polices that can be avoided completely through the transfer of risk?
- Contracts: Are proper contracts in place? Have all contracts been properly reviewed?
- Indemnity/Hold Harmless Clauses: As a minimum contracts should make your contracted parties responsible for their own negligence.
- Insurance Clauses: The clause should set out the form, terms and amounts of coverage and specify that you will be added as an additional insured.
- Additional Insured: If the contract provides you with protection in the form of indemnity and there is a requirement of the contracted party to maintain insurance, you should be added as an additional insured under their policy and provided with proof of insurance in the form of a certificate of insurance.
- Contracts: This is a standard industry document and it is usually issued very quickly upon request. If your contracts require proof of insurance you should insist upon promptly receiving a certificate of insurance. The certificate should set out the terms of the coverage and contain a provision to provide you with notice in the event of cancellation or non-renewal.
Find Out More:
This list is not exhaustive and there are a variety of other insurance coverages that mining companies need in order to address all the risks they face and prevent losses. Download our free guidebook “Mining and Mineral Risk Transfer Insurance Guide” here to find out how you can protect your company’s assets: