BELT + BRACES = RISK TRANSFERENCE

The best way to protect a client from legal liability and to transfer risk to another company is the belt and braces approach. 

A “belt” is a well crafted indemnity clause where one party (indemnitor) promises to hold the other (indemnitee) harmless for any and all losses arising out of, or connected to, the indemnitor’s work. An example is when a sub-contractor promises to hold a contractor harmless for loss or damages which occur when the sub-contactor is performing work at the job site and the loss is caused at least in part by the sub-contractor’s work.

A “brace” or a set of suspenders is a separate insurance clause in the same contract where one party (indemnitor) promises to obtain insurance for, or add the other party (indemnitee) as an additional insured to the indemnitor’s CGL policy by endorsement. The two promises (belt + braces) are separate and distinct from one another, although they are complementary.

If the “belt” type of indemnity is not upheld, the “braces” type of indemnity is considered to be a second layer of protection. One of both can sustain the overall promise of risk transference between the parties.