Contractual Risk Transfer

Contractual risk transfer is a legally binding way to transfer risk to the party that may be in the best position to control the risks related to the service to be provided. Contractual risk transfer occurs when the language in a non-insurance agreement excuses one party from financial or legal responsibility associated with specific actions, inactions, injuries, or damages.

As an illustration, when you rent your facility to another party (Renter) for a meeting, the Renter will be at the premises and responsible for managing the risks associated with the event.  The Renter controls various elements of the meeting, such as furniture & equipment placement, lighting, refreshments, and safety.  The Renter can secure the projector cord to prevent a trip and fall hazard to attendees and point out the exits.  You transfer your risk as the building owner to the Renter, using a contract or agreement with an indemnification provision.  With the indemnity provision, the Renter agrees it will hold you (Member) harmless, and defend and indemnify you for any liability that results from their activities under the agreement.  In other words, the Renter will pay for any liability as a result of its activities, except liability arising out of your sole negligence (where they had nothing to do with causing the harm).

The dynamic nature of emerging risks has created a great need for creative risk management solutions. As risk continues to change at an accelerated rate, we can use what we’ve learned in the past to help us mitigate the risks of the future and present. A number of resources have been provided below to assist members with contractual risk control issues. For questions or assistance regarding Contractual Risk Transfer, please contact Robert “Bob” May, or (760) 221-8205, of Mainstream Unlimited.  As PERMA and Mainstream Unlimited are not law firms, we also recommend Members consult with their own legal counsel.

Presentation Recording: 1/19/2022 Contractual Risk Transfer Training

Presentation Recording: 3/27/2024 Contractual Risk Transfer Training