Getting Short-Sheeted: Reviewing MSAs for Coverage Gaps

By The Reschini Group

Don't get short-sheeted on your insurance coverage.
Don’t get short-sheeted on your insurance coverage.

Hurrying through the department store, you grab a set of bedsheets on sale, only to get home and realize they’re queen-size sheets and you have a king-size bed.  You paid for sheets, all right, but they don’t provide sufficient coverage for your needs.

In like manner, businesses are asked to sign Master Service Agreements when contracting with other businesses.  These MSAs delineate the terms under which the two parties will conduct their business, including insurance coverages.  The stipulations may be properly in order, or there may be discrepancies and differences that should be addressed.

For this reason, all MSAs should be carefully reviewed by insurance professionals, to prevent either a lack of coverage, or to identify a situation where insurance in excess of actual need may be unnecessarily imposed.

As an example, a subcontractor signs an MSA requiring insurance to be able to work with a general contractor.  The MSA includes insurance addendums and attachments.  The subcontractor in this instance would be well advised to seek an independent opinion about the terms included in those documents.  Which insurance-related items are really needed?  Which ones are not applicable to the work to be provided?

Sometimes, the insurance coverage a subcontractor already has in place may be sufficient, saving the added cost of expanded insurance requirements in the proposed MSA.

Hashing out these details makes sense from every angle.  Without carrying the proper level of insurance, a subcontractor will not be hired.  But without making sure the insurance-related requirements are fair and appropriate, the subcontractor may be caught short or overpay.

Bottom line – bring the MSA and any insurance addendums and attachments to a professional insurance consultant.  That way, all parties involved in the business relationship can move forward with confidence.  The team at The Reschini Group provides this service, and encourages all of its clients to take full advantage of it.

Because the last thing anyone needs is to get short-sheeted on his or her insurance.

Copyright 2016 The Reschini Group

The Reschini Group provides these updates for information only.  To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.