Masonry Magazine February 1965 Page. 15
The same employee and (3) losing his right of subrogation; that is, your right to be reimbursed by the responsible party for Compensation benefits paid.
A loss for which you could have been 100% reimbursed, therefore, can cost you or your insurance company at least double, and probably more, because there is no limit to jury awards as there is to Compensation benefits. All for an injury caused entirely by someone else.
If we can assume that a property owner contracting for a building has in force a Liability Insurance Policy covering negligent acts of his own employees, in addition to the usual Workmen's Compensation Coverage, there is no real need for a broad Hold Harmless Agreement. The owner is usually fully protected without Hold Harmless where:
(A) He has adequate insurance to cover his own employees for Workmen's Compensation and General Liability.
(B) His general contractor and all subcontractors are adequately insured.
(C) He has Owner's Protective Liability Coverage, either as part of his Comprehensive General Liability Policy or in a separate contract issued in his name and furnished by the contractor. This protects the owner against liability arising from operations of independent contractors, including that arising from the owner's own supervision.
The catch is that the owner must also be willing to recognize and accept responsibility for his own properly insured legal liability. Many instead pass all responsibility on to the contractor, thereby charging any claims to his loss experience rather than the owner's. So long after the job is completed, the contractor can be penalized by a higher premium based upon that loss record. The effect is compounded when the contractor logically requires the same agreement from any subcontractors involved; indeed, the specifications often insist that be done. Each such agreement involves a premium charge per $100 of contract cost, still for an exposure most likely adequately insured before the cycle began.
There seems little doubt, however, that Hold Harmless Agreements are here to stay, because of habit if nothing else. Purely from the standpoint of the indemnitee, such contracts are looked upon favorably because they can be written with fewer restrictions than an insurance policy. They can also elude certain statutes, as the Illinois Scaffold Act.
Part III
In Next Month's Masonry
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MASONRY February, 1965