Contractual Risk Transfer: Frequently Asked Questions

Contractual Risk Transfer: Frequently Asked Questions

Business Insurance FAQ Contractual Risk TransferMany businesses sign contracts that include contractual risk transfer but you may not actually know what this is.

What is Contractual Risk Transfer?

Contractual Risk Transfer is a non-insurance risk transfer mechanism that allows someone like a general contractor to transfer the risk to another party such as a subcontractor. Now what does that actually mean? A general contractor can be held liable for the actions of the party that they subcontract work to. This makes the general contractor ultimately responsible for the entire jobsite. Contractual risk transfer allows the general contractor to transfer that burden to others.

So, what is the best use of contractual risk transfer?

The risk is transferred and when done correctly it places the financial burden on the party closest to and best able to control the chances of a loss occurring.

Can Contractual Risk Transfer Be Used Incorrectly?

Be sure to review the contract carefully before accepting. Your insurance is bound to the contract. If the contract does not cover or specifically excludes something it may not be able to respond if a claim comes up.


For more information or answers to your insurance questions, contact us at Allan Block Insurance Agency,, located in Tarrytown, NY in the heart of Westchester County, a key business district near New York City.  We write auto, home, renters, condo, co-op, personal, business, life and group insurance for clients locally and in NYC, CT, NJ, PA, MA and many other states. The Professional Agency with the Personal Touch.