Prefered Governmental Insurance Trust
Certificate of Insurance / Hold Harmless Agreements
This Special Report by Public Risk Underwriters is intended to help members identify potential risks or loss exposures and effectively deal with them through Certificates of Insurance and Hold Harmless Agreements.

There are basically three means of controlling risks: 1) eliminate the risk entirely; 2) transfer the risk; or 3) assume the risk.

To protect your interest in Preferred Governmental Insurance Trust (PGIT), each member must do its part in identifying and managing risks.   There is a need to deal effectively with every exposure which can adversely impact the financial strength of the liability program.   One significant area in which members can reduce exposure to losses is in handling contractors, vendors, or organizations, whether they be for-profit corporations or neighborhood associations.   Your day-to-day business transactions or simply allowing someone or some group to use your property may result in a claim against you because you failed to effectively identify and transfer potential exposures.

For these and numerous other possibilities, it is important that Hold Harmless Agreements and Certificates of Insurance be obtained from contractors, vendors, groups, organizations, and individuals that deal with you or use your property regardless of whether it is a contractual or gratuitous arrangement.   Remember, each time another party becomes involved, they change your exposure; and in most instances, that exposure may be greater than you anticipated!

It is very common in today’s legal system to bring everyone into litigation to find someone with the ability to pay for an injured party.   In many cases we may be able to dismiss you from the litigation, if there is no negligence on your part, however, PGIT will still pay legal expenses to defend you.

With this in mind we make these suggestions regarding establishing procedures for Hold Harmless Agreements and Certificates of Insurance.

First, all contractors, vendors, organizations, or groups doing business with or using your facilities or property should be required to provide you with a Hold Harmless Agreement and Certificate of Insurance, without exception.   This is for the protection of you and the other members in PGIT.

A Hold Harmless Agreement is needed to provide the contractual arrangement between the member and another party, to insure the other party will accept their legal obligations, and protect the member from any and all claims arising out of their actions.   A Certificate of Insurance must also be requested, to provide proof of coverage.   The member should be named as an “Additional Insured.”  

Both documents, the Hold Harmless Agreement and Certificate of Insurance, are required since the certificate is merely evidence that the other party has insurance.   This is not a legal contract.   Without these documents, the member may find itself financially responsible for the acts of others.

The certificate will only protect the named insured and additional named insureds for the conditions and limits provided in the insurance policy obtained by the “Second Party.”   If the limits are not sufficient, or the coverage is inadequate, or excluded under their contract, or for some reason their policy of insurance was canceled, the member would not be protected.   In that event, you would have to rely on the Hold Harmless Agreement.   But without the Hold Harmless Agreement, the PGIT would then have to defend and pay any possible judgments.

The importance of the Certificate of Insurance, naming the member as an Additional Insured, cannot be over emphasized.   Not only is it important to request the Certificate of Insurance, but it is also important to establish certain procedures to follow-up and monitor the receipt and content of the Certificates.

We suggest that the following procedures be established in regard to obtaining Hold Harmless Agreements and Certificates of Insurance:

1   All contracts should have an insurance clause built in.   The insuring agreements should provide a Hold Harmless protecting the member from any and all claims, and requiring the other party to provide the member with a Certificate of Insurance, naming the member as an “Additional Insured.” 2   Before any contract is signed, the contract should be reviewed by the member’s attorney. 3   After the contract is signed, the member should set up a diary system to make sure the Certificate is received within a reasonable amount of time; usually, not longer than 30 days. 4   After the Certificate is received, it should be reviewed for the following: a   The named insured is the same as the name on the contract. b   All the coverages are sufficient to cover the exposure. c   The policy limits are adequate.   In most cases the limits should be no less than $1 million, and if any exposure dictates, the limits should be increased. d   Check the policy expiration dates to make sure they cover the contract period. If the policy expires before the contract terminates, there should be a diary system to follow-up.   Approximately 30 days before the expiration date should be sufficient time to request an updated certificate. e   Check to make sure the member is named as an “Additional Insured” on the Certificate.   The wording “Additional Insured” must appear on the Certificate. Having the member’s name appear in the box “Certificate Holder” is not sufficient. f   Make sure the person signing the certificate has authority to do so.   You can equire such evidence. g   The Certificates of Insurance should be maintained until the statute of limitations expires.   In most cases, 4 years will be adequate. h   If you determine the possible exposure is severe, request a copy of the policy. Normally this will be the exception, not the rule.

The process of requiring, reviewing, and following up on Certificates of Insurance may seem like a menial and tedious task, but it is one of the most important tools in an effective risk management system that will serve ultimately to protect your interest. Printable Copy

WHY HAVE A HOLD HARMLESS AGREEMENT?
George A. Helm III, Esquire
Public Entity Legal Solutions

The purpose of this article is to point out some recent court decisions which involved governmental entities’ hold harmless agreements.  

In Gonzalez v. City of Coral Gables, 871 So.2d 1067 the plaintiff was a fifteen (15) year old high school student who was at a fire station in connection with her participation in the Coral Gables Fire Rescue Explorer program.   In order to participate in this program the student was required to submit a hold harmless agreement that was signed by both a parent or a guardian, and the student.   Unfortunately, in this particular case the student was injured when she slipped and fell at the fire station.   The student and her mother subsequently filed a negligence action against the City.   The City, in turn, sought dismissal of the negligence action based on the hold harmless agreement.   The trial court granted the City’s motion, and the Third District Court of Appeal agreed.   Simply put, because the student and her mother signed a hold harmless agreement, which enabled the student to participate in the program, the City of Coral Gables could not be held liable for the alleged negligence which caused the student’s injuries.  

In Prison Health Services, Inc. v. Florida Association of Counties Trust, 858 So.2d 1119, the plaintiff was an inmate at the Polk County Jail.   The plaintiff was injured in an altercation with several corrections officers.   After being injured, the plaintiff was taken to the nurse’s station at the jail, which was staffed by nurses employed by Prison Health Services.   These nurses didn’t appreciate the extent of the plaintiff’s injuries, and the plaintiff remained at the jail, under observation, until he lapsed into a coma.   The plaintiff was later transported to the hospital where he died several weeks later.  

Prison Health Services had signed an indemnification agreement with the Sheriff.   The Sheriff eventually settled with the plaintiff’s estate for the sum of $1 million.   After the settlement, the Sheriff subsequently sought indemnification from Prison Health Services.   Florida Association of Counties Trust was involved because they were the Sheriff department’s insurer.   At trial the court determined the estate’s claim against the Sheriff’s department and the Florida Association of Counties Trust was covered by the indemnification agreement.   Prison Health Services appealed the trial court’s decision.

On appeal the Second District Court looked at two issues:   whether the claim was subject to indemnification as a matter of public policy; and whether the claim was covered by the indemnification provision of the agreement.   Ultimately, the Second District Court ruled there were factual issues that need to be determined before both issues could be answered.   Most importantly, the Second District Court noted the indemnification provision of the contract limited indemnification to those claims related to or arising out of the performance of services and duties provided under the agreement.   The indemnification agreement did not support indemnification of a claim for the tortuous conduct of the individual officers or the hiring and supervising duties of the sheriff.   Although the Court did not ultimately make a decision concerning application of the indemnification agreement, the moral of this case is to make sure any indemnification contract contemplates every potential area of liability.  

In Ray v. Pensacola Sertoma Club, Inc., 809 So.2d 81 ( Fla. 1st DCA 2002), the City of Pensacola approved the Pensacola Sertoma Club’s request for a special events permit.   As part of the permit process the Pensacola Sertoma Club was required to follow a Pensacola City Ordinance which required them to indemnify and hold the City harmless for any and all claims caused by or arising out of activities permitted by the permit.  

Ultimately, a spectator at the special event was injured when she fell over a support line that ran from the trunk of a tree to a ground stake.   The spectator brought a negligence action against the City and various other defendants and subsequently settled all of her claims.   The spectator also received an assignment of the City’s indemnification rights from the Sertoma Club for the amounts paid to the spectator in settlement of her claim.  

The trial court ultimately granted the Sertoma Club’s motion for summary judgment, and denied the spectator’s motion for summary judgment on the basis that the City’s indemnity did not provide for injuries arising from the City’s own negligence.   The First District Court of Appeal reversed the trial court’s decision because they construed the City’s ordinance to provide indemnity for injuries arising from the City’s own negligence.  

In Continental Casualty Company v. City of South Daytona, 807 So.2d 91 ( Fla. 5th DCA 2002), the Halifax Little League Association contracted to use the City’s facilities for little league events.   As part of the agreement the little league promised to assume responsibility for any and all claims which arose from the use of the City’s facilities to protect, defend, indemnify, and hold harmless the City from any and all claims including personal injury, and to secure an insurance policy naming the City as a co-insured.   During one of the little league games a baseball coach was hit in the face by a baseball and sued the City and the Little League.   The City ultimately prevailed in the legal action, sought reimbursement for the costs of defense as well as attorney’s fees.   The trial court found the terms and conditions of the agreement between the City and the little league controlled and the City was entitled to attorney’s fees and costs incurred in defense of the claim.   The Fifth District Court agreed with the trial court and the City’s argument that the hold harmless and indemnification agreement shifted exposure from the City’s own liability insurance carrier to the little league’s liability carrier.   The primary obligation to defend the City for an action arising out of the little league’s use of the City’s facilities was with the little league’s insurance carrier.  

The aforementioned cases tell us hold harmless and indemnification agreements are enforceable.   However, the cases also exemplify the need to make sure such agreements are well drafted to take into consideration every possible area of exposure to include any and all acts of the municipality itself that could give rise to legal action. Printable Copy

George A. Helm III, Esquire is an employee of Preferred Governmental Claim Solutions.   PELS is established as a service and a benefit to PGCS and their clients.   PELS is a not-for-profit enterprise.