A Procurement Master Purchase Agreement defines the terms for purchasing goods or services at scale, streamlining vendor relationships under one umbrella contract. This playbook focuses on commercial leverage, service levels, and compliance mechanisms that drive long-term value.
Why This Matters: Insufficient insurance exposes parties to uncovered liabilities and can amplify financial consequences of claims.
Negotiation strategy
If you're the Buyer:
Ensure that the Contractor provides proof of insurance before commencing work. Verify that the coverage limits meet or exceed industry standards to protect against potential liabilities.
If you're the Seller:
Negotiate for reasonable coverage limits that align with the scope of work. Provide timely certificates of insurance to avoid delays in project commencement.
Essential elements
1
Coverage Types
Required insurance types.
2
Coverage Limits
Minimum coverage amounts.
3
Proof of Insurance
Certificates of insurance required.
Action framework
ACCEPT
Propose edits if coverage limits are insufficient or if additional insured status is not included.
EDIT
Reject if the clause lacks essential insurance types or fails to name the other party as additional insured.
ADD
Add language for waiver of subrogation or higher limits for high-risk activities.
PRO TIP
Always verify that insurance policies are current and meet the specified requirements before work begins.
Example clauses
FAVORABLE
Comprehensive Insurance Coverage
"Each party shall maintain, at its own expense, the following insurance coverage during the term of this Agreement: Commercial General Liability Insurance, Workers' Compensation Insurance, Automobile Liability Insurance, Professional Liability Insurance."
NEUTRAL
Standard Proof of Insurance
"Each party shall provide the other party with certificates of insurance evidencing the required coverage prior to the commencement of services under this Agreement."
UNFAVORABLE
Lack of Additional Insured
"The insurance policies do not name the other party as an additional insured, potentially leaving gaps in coverage."
Fallbacks
High-Risk Projects
For projects involving high-risk activities, such as construction, higher coverage limits or additional insurance types may be necessary to adequately protect both parties.
International Operations
When contracts involve international operations, adjust insurance requirements to comply with local laws and ensure coverage is valid in all jurisdictions.
Small-Scale Contracts
For smaller contracts, consider reducing coverage limits to align with the reduced risk, while still maintaining essential protections.
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