Certain provisions of an agreement may seem like boilerplate,
but one shouldn't be skimming insurance provisions. Since
a not-for-profit organization may find itself liable for the
actions of its service providers, it is important that the
organization ensure, in advance, that it is adequately insured for
such liabilities. I asked my insurance colleague Kelly Morris some
general questions to help not-for-profit organizations better
understand insurance provisions in agreements provided by service
Question: What is the first thing an organization
should consider when reviewing insurance provisions in an agreement
from a service provider?
Kelly: An organization should consider
whether the agreement requires that the service provider maintain
insurance coverage that is usual, both in terms of type of coverage
and amount, for their industry during the term of the agreement,
and whether the agreement requires that the service provider or the
insurer advise the non-profit organization of any changes or
termination of such insurance coverage.
Question: How does an organization determine the
appropriate type of insurance and limits required?
Kelly: An organization should consult
with its insurance broker to determine the appropriate types of
insurance and required limits. The organization's legal
advisors should review the policy before it is issued to ensure
that the policy terms are appropriate and that there are no unusual
limitations or exclusions.
Question: Sometimes insurance provisions refer to
"additional named insured". What does it
Kelly: An "additional named
insured" is someone other than the first person named as
insured under the policy. Such a person is also named as an insured
person under the policy, and has the same rights as the first
person named as insured. For example, the service provider would be
the first person named as insured and the non-profit organization
would be the additional named insured. Sometimes this person or
entity has been added as an insured under the policy after the
policy is written.
Question: Should an organization always ask its
service providers to add the organization on the provider's
insurance as an "additional named insured"?
Kelly: It depends on the facts. Generally,
an organization would ask to be added as an "additional named
insured" when the organization is concerned that it may be
liable for activities performed by the service provider and wants
to ensure that the service provider's insurance will cover such
liabilities. For example, if a non-profit organization was hosting
a fundraiser at which there was going to be a bouncy castle for
children, it might be concerned that it might be the subject of a
claim if a child was injured. The non-profit organization might
therefore request that it be an additional named insured on the
commercial general liability insurance coverage of the bouncy
castle provider with respect to the fundraiser. In some cases,
where an organization is not concerned that it might be the subject
of an insurance claim as a result of the service provider's
actions, the organization might be satisfied if the service
provider proves it has sufficient insurance in its own name to
cover any potential liability.
Question: How long should the insurance
obligations be imposed upon the service provider?
Kelly: The insurance obligations of the
service provider should be tied to the length of any potential
claims against the service provider or the non-profit organization
as a result of the service provider's activities. Your
insurance broker or lawyer can provide you with more specific
information based on the specific facts and whether the insurance
held by the service provider is "claims-made" or
There are other aspects to consider when reviewing insurance
provisions. We recommend that organizations review these
provisions with their insurance brokers and legal advisors with
respect to the specific fact scenario.
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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