Compensation is generally awarded by each party on behalf of all employees and real estate within its “group.” Individuals and companies belonging to the “groups” of each contracting party are defined in the agreement and generally include a party`s subcontractors and affiliated companies, as well as all their employees, executives and guests. Since a party is responsible for all claims to its group, it is important that the scope of each party`s “group” be carefully defined in the definitions. 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). However, snack agreements have been criticized by insurers as unfair to the party not responsible for an accident. If, for reasons of administrative facilitation, the insurer pays to repair the damage suffered by its own insured instead of prosecuting the person responsible for the accident for all relevant costs, an effective claim is claimed against the insurance card of that policyholder. In this way, “toc-to-knock” agreements can lead policyholders to unexpectedly realize, when renewing their insurance, that they should expect higher premiums, regardless of the liability of an accident in which they participated. A knock-for-knock agreement is an agreement between two insurance companies that, if the policyholders of both companies suffer losses in the same case of insurance (usually a car accident), each insurer pays the losses incurred by its own policyholder, regardless of who is responsible. “Knock for knock” is a joint contractual agreement in the oil and gas industry.  The operator of an oil and gas property needs the help and know-how of many types of contractors, including drilling companies, drilling service providers, facility builders, equipment suppliers and caterers. As a general rule, the operator will use these services as part of a master service contract that defines the essential general conditions under which the work is performed. One of these conditions is the distribution of the risk of loss between people and property. In general, a knock-for-knock agreement means that any party working on an oil and gas site – the operator and any contractor – agrees to protect and compensate all other parties against violations by employees and agents of that party as well as the destruction or damage of that party`s property. This allowance is not based on the fault or guilt of the individual whose staff was injured or whose property was damaged.
The objective is to effectively defend and pay a debt through the co-responsibility of a single party responsible for the loss. The reason is the economic and administrative efficiency: while an insurer may be able to track a recovery from the party responsible for an accident or to its policyholder, it is an expensive administrative procedure. The Knock-for-Knock agreement simplifies recovery rights among insurers and, over time, costs are fair to insurers.