By Rickard Jorgensen, FCII, ARM, ACIArb
We recently received an inquiry from a CPAGold™ policyholder about whether there was coverage for subcontractors under the program. Simple, there is but only in regard to services performed on behalf of the Named Insured.
While it is prudent and good risk management to verify that any subcontractors have independent professional liability insurance program, this may not be sufficient to cover an assignment, nor protect the CPA firm. Consequently, the CPAGold™ expand the definition of insured persons as follows:
8.21 You and/or your means only the following: ………
8.21.4 any of your present or former temporary or leased personnel, or a present or former subcontractor engaged by you, but only while acting on your behalf;
Similarly, our major competitors’ policies contain comparable clauses:
- any person or entity that is an independent contractor to the Named Insured provided that such person or entity is not:
- employed by the Named Insured or predecessor firm or by any entity controlled, owned, managed or operated by the Named Insured or predecessor firm;
- controlled, owned, managed or operated by the Named Insured or predecessor Firm or by any entity that is controlled, owned, managed or operated by the Named Insured or predecessor firm; but only for professional services performed on behalf of the Named Insured and only to the extent that remuneration for such services inures to the benefit of the Named Insured.
- Any independent contractor of the named insured or a predecessor firm solely while acting on behalf of the named insured or a predecessor firm; ….
However, it is imperative that any sub-contacted assignment is supported by an well-wording indemnification agreement that protects the CPA firm from claims made by clients that arise out of services performed by the subcontractor. Speak with an appropriately qualified attorney about this.
Jorgensen & Company are not attorneys and do not offer any form of legal advice. Consult with appropriately qualified local counsel for more assistance. Rickard Jorgensen is President and Chief Underwriting Officer for the CPAGold™ program and may be contacted at (201) 345 2440 or firstname.lastname@example.org