Purpose

To provide guidelines on insurance and indemnification issues specific to contract negotiation.

Scope

All employees involved in contract negotiation.

Insurance Clauses

Determine whether the requested types of coverage and limits are consistent with FINITE TECHNOLOGIES, INC.’s actual coverage / limits:
• Comprehensive General Liability - including products/completed operations and contractual liability with limits of liability not less than $1,00,000 each occurrence for bodily injury and property damage and $1,000,000 in the aggregate.

• Comprehensive Automobile Liability Insurance - including non-owned and hired vehicle coverage with limits of not less than $1,000,000 for bodily injury and property damage for each accident.

• Workers’ Compensation and Employer’s Liability - for all FINITE TECHNOLOGIES, INC. employees engaged in performing work hereunder, workers’ compensation with statutory limits coverage and employer’s liability insurance with limits not less than $1,000,000 for each accident.

Indemnification

Limit the indemnity to claims for death, personal injury and damage to real or tangible personal property. Never agree to indemnify a Customer for consequential damages, such as lost profits.

FINITE TECHNOLOGIES, INC.’s indemnity obligation should not exceed the extent to which FINITE TECHNOLOGIES, INC.’s acts or omissions caused the claim or damage.

Three elements should always be present in indemnity clauses:

1. Customer must be obligated to provide FINITE TECHNOLOGIES, INC. written notice of any claim promptly after becoming aware of it;
2. FINITE TECHNOLOGIES, INC. must receive the exclusive right to defend and/or settle the claim, and
3. Customer must, at FINITE TECHNOLOGIES, INC.’s expense, provide any cooperation reasonably requested by FINITE TECHNOLOGIES, INC. in connection with the defense and/or settlement of the claim.

Given the above, a properly drafted indemnity clause would read as follows:

"FINITE TECHNOLOGIES, INC. will defend, indemnify and hold Customer harmless from and against all claims, liabilities, losses and damages and expenses for death or personal injury or damage to real or tangible personal property to the extent resulting from any act or omission of FINITE TECHNOLOGIES, INC. in connection with performing duties under this Agreement. Customer agrees that:

1. Customer shall notify FINITE TECHNOLOGIES, INC. in writing of any claim that may become subject to this indemnity promptly after becoming aware of it,
2. FINITE TECHNOLOGIES, INC. shall have the sole and exclusive right to control or conduct the defense and/or settlement of any such claim, and
3. Customer shall do all acts, at FINITE TECHNOLOGIES, INC.’s expense, that may be reasonably required by FINITE TECHNOLOGIES, INC. in connection with such defense and/or settlement"

Important: All contracts that would require FINITE TECHNOLOGIES, INC. to assume financial responsibility for the sole or entire negligence of a third party must be reported to the Risk Management Department within 60 days or coverage will terminate. All such contracts must be reduced to writing and a copy sent to Risk Management.

Waiver of Subrogation

Always try and eliminate this requirement. If it becomes a hot issue and must be included in the contract, Risk Management must receive a copy of the contract within 30 days. If there are questions as to whether this contract provision is warranted, please contact Risk Management.

Additional Insured

Any requirement to name a customer as an additional insured on FINITE TECHNOLOGIES, INC.’s insurance policies should be treated in this way:

• First try and delete from the contract any reference that the customer be named as an additional insured. If this is not an option, try the following:

• Tie coverage which is being made available under the additional insured endorsement to liability assumed under the indemnity/holdharmless section of the contract. For example, immediately after you agree to name the customer as an additional insured include "but only as respects liability assumed under paragraph NO. (this is the indemnification paragraph)" and name the paragraph.

• Restrict the scope of the additional insured coverage by adding the wording "but only to the extent and scope of coverage required by Contractor under paragraph NO. (title of insurance requirements paragraph)" of the contract.

• Have your local broker issue an endorsement naming the customer as an additional insured, but tie the additional insured wording to the contract number. For example, "XYZ Corporation is named as additional insured on FINITE TECHNOLOGIES, INC.’s general liability policy, but only as respects to work performed under contract number 123456."

• Include an exception to the additional insured coverage for liability arising out of the gross negligence, willful misconduct or sole negligence of the customer.

Given the above rules, a properly drafted additional insured clause would read "customer named as additional insured but only as respects to work performed under contract # 123456 and only as respects liability assumed under paragraph NO.____(Indemnification paragraph) and only to the extent coverage is required by the contract in paragraph NO. ____ (title of Insurance requirements paragraph)." Except for liability arising out of the gross negligence, willful misconduct, or sole negligence of the customer.