Risk Transfer Policy

Originally Adopted by MVRMA Board: December 21, 1992

Purpose

The transfer of risk is an essential tool for controlling risk. Proper indemnification and insurance language in leases, purchase agreements, service agreements, and contracts enable public entities to protect themselves from unnecessary exposure to risk and liability, particularly when the public entity does not have direct control over the activities of a third-party service provider.

The purpose of this policy is to require MVRMA members to consciously define the legal and financial responsibility for work performed or services provided by third-parties in behalf of the Association's members.

Policy Statement

Effective with the adoption of this policy, it shall be the policy of the Miami Valley Risk Management Association to obligate its members to shift the legal and financial responsibility for losses or potential losses caused by the actions of a third-party(ies) to the third-party(ies), whenever reasonably possible, which performs the work or provides the service to the member city. This transfer of risk may occur through a variety of means including, but not limited to, the employment of appropriate language in leases, purchase and service agreements, and contracts.

The transfer of risk shall be made formally and in writing and may include indemnification agreements, insurance requirements, the required provision of certificates of insurance (with the member city named as an "Additional Insured"), etc.

Among the services and activities which shall be considered for transfer to other persons, organizations or entities are Special Events (including fairs, carnivals, parades, and other activities that involve vehicles, animals, large crowds, or the sale of alcohol), Building and Street Design, Construction, and Maintenance Activities, Emergency Services, Human Services (including mental health care centers, day-care providers, etc.), and Environmental Management Programs (including landfills, trash collection, recycling service providers, and resource recovery facilities).

Member cities shall generally rely upon the expertise of their own legal counsel or staffs to review contracts and other agreements where risk transfer is appropriate. The MVRMA staff shall provide model indemnification agreements, insurance section language for contracts, checklists, or other information at the member's request. The MVRMA staff shall also provide consultation services to the member and provide assistance in contract review on an "as needed basis", in order to ensure that this policy is administered most effectively.

Nothing in this policy shall limit the insurance protection against loss or injury afforded to each of MVRMA's members. However, non-compliance with this policy may result in Board action requiring the City in violation of said policy to reimburse MVRMA for the litigation defense costs incurred by MVRMA resulting from the failure, or face possible expulsion under Article XVI (b) of the MVRMA by-laws.