12. Insurance

12. Insurance

In appropriate instances, the licensee should require the vendor to provide evidence of insurance, to maintain that insurance throughout the term of the agreement, and to notify the licensee of any changes to the insurance. Insurance provisions are important to ensure the licensee has a level of comfort and protection that if things go badly, the licensee will be able to recover money damages against the vendor.

Example Provision:

28. Insurance Requirements. ^[2]

    • 28.1 Required Insurance Coverages. Vendor shall obtain, pay for, and maintain in full force and effect during the Term insurance as follows:

      1. Statutory California Workers' Compensation coverage including all-states endorsement. Employer's Liability coverage for one million dollars ($1,000,000) per occurrence for all employees engaged in services or operations under this Agreement;

      2. Commercial general liability insurance with limits of three million dollars ($3,000,000) aggregate for bodily injury, death, and property damage, including personal injury, contractual liability, independent contractors, broad-form property damage, and products and completed operations coverage;

      3. Automobile liability insurance with limits of one million dollars ($1,000,000) each occurrence combined single limit of liability for bodily injury, death, and property damage, including owned and non-owned and hired automobile coverages, as applicable; and

      4. Professional Liability Insurance (Errors and Omissions) with limits of three million dollars ($3,000,000) each occurrence. Annual aggregate for all claims each policy year for computer programming and electronic data processing services.

    • 28.2 Claims-Made Coverages. To the extent any insurance coverage required under this Section is purchased on a "claims-made" basis, such insurance shall cover all prior acts of Vendor during the Term, and such insurance shall be continuously maintained until at least three (3) years beyond the expiration or termination of this Agreement, or Vendor shall purchase "tail" coverage, effective upon termination of any such policy or upon termination or expiration of this Agreement, to provide coverage for at least one (1) year from the occurrence of either such event.

    • 28.3 Certificates Of Insurance. Prior to the Effective Date, Vendor shall provide to Customer an original and one copy of a Certificate of Insurance certifying that coverage as described in this Section has been obtained. The verification of insurance coverage shall be sent to the address indicated. The Certificate of Insurance shall state:

      1. Customer, its officers, agents, and employees as additional insureds (required for Commercial General Liability and Automobile Liability only);

      2. Provide that each of the policies is primary insurance with respect to any other insurance available to Customer as to any claim for which coverage is afforded under the policy; and

      3. The policy shall apply separately to each insured against whom a claim is made or suit is brought (required for Commercial General Liability and Automobile Liability only).

    • 28.4 Subcontractors To Be Insured. Vendor shall require all of its subcontractors to carry insurance coverages and limits as agreed to and approved in writing by Customer.

    • 28.5 Cancellation Or Lapse Of Insurance. Vendor shall provide thirty (30) days' prior written notice to Customer of cancellation. Should Vendor fail to keep in effect at all times the insurance coverages required under this Section, Customer may, in addition to and cumulative with any other remedies available at law, equity, or hereunder.

^[2]The liability limits provided in this provision are provided by way of example only. The actual limits in a particular contract will be governed by the amount of fees involved in that transaction and the criticality of the application to the licensee's organization.