Or How to lose your Company

In part one of this two-part article the importance of having a written agreement for all wholesale and commercial accounts was stressed.
The written agreement needs to state who is responsible for the physical damage to any tank/dispenser, pumps and regulators set by the propane marketer for use by the wholesale or commercial account.

The agreement needs to require the wholesale account to provide a certificate of insurance naming the marketer as an additional named insured and state that the wholesale account’s insurance is primary.

Lastly, the written agreement should provide indemnification to the propane marketer for actions taken by the wholesale account.

The marketer then needs to request a new certificate of insurance annually to keep his files current.

The marketer should also be prepared to furnish the wholesale account with a certificate of insurance naming the wholesale customer as an additional named insured and provide limited indemnification.

The problem that we are trying to solve by this written agreement is to protect the marketer from lawsuits brought against him by the wholesale customer for damages caused exclusively by the wholesale customer.

Since Part One of the article appeared, several propane marketers have commented negatively regarding the emphasis on having written agreements with their wholesale or commercial account.

One propane marketer commented that he was afraid of losing his commercial business to his competitors if he started using written contracts because “none of them require a written contract”.

Further discussion revealed that he had numerous accounts such as rural school districts that every couple of years put their propane requirements out to bid. The bid was sent in a letterform and a telephone call was all that the school did to notify him that he was to provide propane for the coming year.

Talking further with this marketer, we discovered that the school owned the tank and regulators and someone within the school districts maintence department serviced the equipment. No pressure check was done nor was any visual inspection of the regulators or piping done. The marketer had never sent any literature he “just filled the tank”.

by Frank B. Thompson, CPCU
President PT Risk Management

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