Joint Venture Coverage - No Big Deal

Many small businesses owners look for ways to leverage their business. Here’s what I mean.  Take two business owner’s with skills that the other needs.  Certain situations may arise where it is in their best interest to form a joint venture to capture a project. For example: It is a benefit for small business owners to collaborate when increasing their capital or financial resources could help land that deal of the century. 

Two companies come together and form a joint venture. No big deal, right?   Wrong! 

Business owners need to pay close attention to the scope of coverage a policy provides for joint ventures.  You might be the lucky one, purely by coincidence, and have a policy that automatically includes the your joint ventures as insureds. 

The most common form only covers joint ventures that are specifically listed on the policy. 

Where joint venture coverage is provided, it is typically limited to your liability arising out of your participation in the joint venture.  Joint venture partners are not covered for their liability arising out of the project.  That’s why it’s important for the business owner to add the joint venture to the policy before any services are performed. 

When it comes to insurance coverage for joint ventures I’ve made it seem very simple … but the policy also contains exclusions pertaining to performance guarantees, faulty workmanship, and damage to owned property. I will leave out any discusses concerning contractual liability at this time. You may also be dealing with claims-made coverage triggers. 

That new project you’re considering may be a great idea.  But be sure to call your agent to discuss any joint venture possibilities you may have in the works.

Photo on Flickr by Pisco Bandito