There are three essential steps to railroad risk transference through insurance:
1. Add an indemnity clause to all contracts making clear that you are asking for indemnity for the contractor’s or vendor’s negligence.
- If you do intend to seek indemnity for the railroad’s negligence too, this language needs to be clear and unequivocal in order to adhere to most states’ requirements.
- Not all states allow exculpatory indemnity. (I will write more about this later. Also see prior blog posts.)
2. If you are seeking transference in a construction contract, add the relevant information per states’ law on indemnity in construction and design projects.
- Not all states allow indemnity for this work, and some states such as South Dakota require specific contract language.
- Consult a lawyer to make sure in drafting the contract for risk transference that the language complies with your project.
3. Add a separate clause for insurance coverage, demanding that the Railroad be added as an additional insured by endorsement under a standard CGL policy without limitations., or an E & O policy if seeking coverage for professional work.
- Be certain that the insurance policy does not just add an endorsement broadening the coverage for “Who is a Name Insured,” as this endorsement excludes coverage for contracts between a named insured and a railroad involving construction or demolition.
- OR Require contractor or vendor to obtain Railroad Protective Liability insurance, without limitations, if the project is defined by time, place and scope.