How to Read the Insurance Requirements in a Contract

Contracts & compliance6 min read

Limits are the easy part

Required limits are simple to check and are rarely where the problem lies. Confirm them, then move on to the wording, which is where most compliance failures actually occur.

Additional insured status

This extends your liability policy to another party for claims arising out of your work. Confirm the endorsement exists, that it covers both ongoing and completed operations if required, and that it reaches the specific entities the contract names.

Waiver of subrogation

A waiver gives up your insurer’s right to recover from the other party after paying a claim. Your insurer has to agree to that by endorsement. Promising it in a contract without endorsing the policy puts you in breach.

Primary and non-contributory

This requires your policy to respond first, without seeking contribution from the other party’s insurance. It is a specific endorsement and frequently the one that is missing when a certificate is rejected.

Indemnification is separate from insurance

The indemnity clause is a contractual promise you make. The insurance section describes what must back it. A broad indemnity paired with a narrow insurance program leaves the gap on you personally.

Get it reviewed before signing

Once signed, the requirements are fixed and you have to buy whatever satisfies them. Reviewed beforehand, most requirements can be met economically or negotiated.