It is customary to exclude the coup for toc compensation provision from the overall ceiling of liability under the contract and from any exclusion of „consecutive losses“ (as defined in the agreement). Second, you may be „forced“ to accept a service contract suspending your Well Damages service business, which is likely if you want to work in this competitive market. In the absence of a significant portion of your expected earnings for policyholders, it would be desirable to limit (a) your liability to insurance products actually paid for under your policies and/or (b) to include in the service contract a provision that limits your maximum liability for different types of damages well, regardless of the cause. If your service company is not insured for certain damages well, it should take out an affordable liability limit given the P-L proform you modeled for the service contract, whether it is $100,000 or $1,000,000, and consider that amount as self-sustaining insurance. If you are insured for well damages, you contractually limit liability for damages well to a maximum amount below or below the CGL/Excess liability limit, but which, in any case, does not exceed the actual amount of insurance paid under your insurance policies. Some operators use a direct approach to assign more responsibilities to service companies in Well Damages. They use contractual language that specifically distinguishes different types of corrugated damage from the general Knock-for-Knock compensation provision, to the extent that such damage is caused or caused by mere negligence or gross negligence by the service company. The typing system in a contract takes the form of reciprocal compensation between the parties. „Knock for knock“ is a regime widely used in the offshore oil and gas industry. It is often found only in disputes that arise after a serious disaster, when the parties concerned try to determine whether they (or one of their contractual partners) should be held financially responsible for the costs of the disaster. The rationale for using the Knock-for-Knock system is that it would be costly and virtually difficult to adopt an „error-based“ approach to liability for offshore energy projects.
The operator will often have numerous interfaces and subcontractors that work in parallel and object to: (a) the death of an employee of the operator and other subcontractors of the operator and (b) losses and damage to the owner`s property and other subcontractors, would result in several overlapping insurance policies.