What is not included in an insuring clause?

The insuring clause states the very purpose of the life policy; it outlines the conditions under which the policy will pay. If the insured dies, the insurer promises to pay the beneficiary the death benefit as laid out in the policy. It contains the face value of the policy, the insured's name, and the name of the insurer.

INSURING CLAUSE. Whereas the company, partnership or firm as stated in Item 1 of the Schedule (the “Named Insured”) has made to Underwriters a Proposal, a copy of which is attached hereto, which is hereby agreed to be the basis of this Policy, We, the Underwriters, in consideration of the payment of the Premium stated in Item 8 of the Schedule, agree, subject to all the terms and conditions of this Policy, to indemnify the Insured against all sums which the Insured shall become legally liable to pay as damages and claimants’ costs, fees and expenses as a result of any claim first made against the Insured and notified to Underwriters during the Period of Insurance stated in Item 3 of the Schedule arising out of any negligent act, negligent error or negligent omission by the Insured or any negligent act, negligent error or negligent omission by others for whom the Insured is legally liable, in or about the conduct of the Named Insured's professional business as stated in the Proposal.

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Insurance clauses, also called general insurance clauses and insurance provisions, are the limitations of liability policy conditions and general liability risks an insurance provider takes. They’re also applied when more than one commercial property policy is in place by assigning financial liability in claims proportionately.

Here is another article that defines insurance clauses.

Insurance Clause Explained

Insurance clauses are used whenever parties are taking on insurable risks. They can prevent disastrous business consequences in the future.

Types of Insurance Clauses

There are four types of insurance clauses, including:

• Type 1: Indemnification agreements
• Type 2: Contract exclusions
• Type 3: Severability provisions
• Type 4: Limitations of liability

See this web article for more information about the different types of insurance clauses.

Purpose of an Insurance Clause

The purpose of an insurance clause is to assign risk associated with services rendered. If there are risk notes, both parties generally accept liability. However, the insurance clause shifts the risk away from clients.

Insurance Clause Examples

Examples of how you can use insurance clauses include:

• Example 1: Requiring tenants to hold renter’s insurance
• Example 2: Financial services firms assigning loss payable clauses
• Example 3: Insurance policies specifying covered losses
• Example 4: Business partners protecting their assets from legal mistakes
• Example 5: Construction companies providing for specific bodily injuries

Insurance Clause Samples

Sample 1 – Construction Contract:

34. Contractor’s Insurance Obligations. The Contractor shall purchase from and maintain insurance for protection from claims under workers’ compensation acts and other employee benefit acts which are applicable, claims for damages because of bodily injury, including death, and claims for damages, other than to the Work itself, to property which may arise out of or result from the Contractor’s operations under this Agreement, whether such operations be by the Contractor or a Subcontractor or anyone directly or indirectly employed by any of them. This insurance shall be written for not less than limits of liability specified in this Section 34 or required by law, whichever coverage is greater, and shall include contractual liability insurance applicable to the Contractor’s obligations under Sections 23 and 33. Certificates of such insurance shall be filed with the Owner prior to the commencement of the Work.

34.1 The insurance required by this Section 34 shall be provided by an insurance company or companies lawfully authorized to conduct business in the state where the Project is located which have a policy-holder’s rating of not less than “A” in the most recent edition of Best’s Rating Guide. Such insurance shall be written on an occurrence basis and shall be maintained without interruption from the date of commencement of the Work until at least one (1) year following the date of Final Payment and at all times thereafter when the Contractor may be correcting, removing or replacing defective or rejected Work, or longer if required below. The Contractor shall name the Owner and its agents and employees as additional insureds on all insurance policies, except the Workers’ Compensation policy. The Contractor shall obtain from the Owner the list of names to appear on the insurance policies. The Contractor shall pay all deductibles. The insurance shall be written for not less than the following limits, or greater if required by law, and otherwise shall comply with the following requirements:

34.1.1 Workers’ Compensation:

1. State: Statutory.
2. Employer’s Liability: $1,000,000.

34.1.2 Commercial General Liability, applicable to all premises and operations, including Bodily Injury, Property Damage, Independent Contractors, Blanket Contractual, Personal Injury, Products and Completed Operations, Broad Form Property Damage (including Completed Operations) and coverage for explosion, collapse, and underground hazards, with limits of liability of not less than the following:

1. $1,000,000 combined single limit per occurrence.
2. $2,000,000 aggregate applicable specifically to the Project.
3. The Commercial General Liability insurance shall be primary and non-contributory with the Owner’s policies carried for their sole benefit and include umbrella liability coverage of not less than $10 million for per occurrence.

34.1.3 Comprehensive Automobile Liability, applicable to any automobile, including owned, non-owned, and hired automobiles, with limits of liability of not less than $1,000,000 combined single limit for Bodily Injury and Property Damage each accident.

34.1.4 Builders All-Risk insurance, with limits of liability as specified in Exhibit A (the “Builders All-Risk Insurance Limits of Liability”) naming Owner as the insured.

34.1.5 Each policy shall contain a provision that the policy will not be canceled or allowed to expire until at least thirty (30) days’ prior written notice to the Owner. Such notices and any endorsements subsequently issued amending coverage or limits shall be delivered to the Owner by certified mail. Upon receipt of any notice of cancellation, non-renewal or reduction in coverage, the Contractor shall within five (5) days procure other policies of insurance, similar in all respects to the policy or policies about to be canceled, non-renewed or reduced in coverage. If the Contractor fails to provide acceptable policies of insurance, the Owner may obtain such insurance at the cost and the expense of the Contractor.

34.1.6 The Contractor shall require each Subcontractor to purchase and maintain insurance of the types and for the durations stipulated hereinabove with policy limits as established by Contractors Master Subcontract Agreements. All general liability policies carried by Subcontractors shall be endorsed to include as additional insured parties the Owner and its agents and employees.

Reference:

Security Exchange Commission - Edgar Database, EX-10.7 11 dex107.htm CONSTRUCTION AGREEMENT, Viewed April 5, 2021, < https://www.sec.gov/Archives/edgar/data/1381697/000119312507121562/dex107.htm >.

Sample 2 – Lease Agreement:

INSURANCE; CASUALTY. Throughout the entire Term of this Lease, Tenant will obtain and maintain in good standing, at Tenant’s expense: (a) public liability insurance with respect to the Premises, and the business operated by Tenant, with such insurance companies and in such form as are acceptable to Landlord with minimum limits with respect to bodily injury of One Million Dollars ($1,000,000.00) per person, and One Million Dollars ($1,000,000.00) per accident or occurrence, and Five Hundred Thousand Dollars ($500,000.00) with respect to property damage; (b) all workmen’s compensation or employer’s liability insurance as may be required by law. Tenant will have all liability policies endorsed to show Landlord as an additional insured with respect to all occurrences and no insurance provided under this Lease will be subject to cancellation or reduction of limits unless at least ten (10) days written notice is given to Landlord. Certificates of all policies evidencing the insurance required must be delivered to Landlord within five (5) business days of Tenant’s execution of this Lease. Tenant will furnish Landlord with a copy of Tenant’s policy or policies of insurance or certificates thereof, within ten (10) days of Landlord’s request for same. If Tenant does not comply with the provision of this Section, Landlord may at its option, cause insurance as aforesaid to be issued, and in such event, Tenant agrees to pay the premium for the insurance within five (5) business days of Tenant’s receipt of Landlord’s demand along with a fee of three percent (3%) of the annual premium for any such policy in order to reimburse Landlord for the administrative cost of coordinating and ensuring Tenant’s compliance with this provision, which such cost would otherwise be extremely difficult and impractical to determine with certainty. In no event shall Landlord be liable for any loss occasioned by fire or other casualty to personal property or fixtures of Tenant, its agents, employees, assignees, sub lessees, bailers, licensees, invitees or of any other person, firm or corporation upon any part of the Premises. Tenant’s insurance will provide primary coverage to Landlord when any policy issued to Landlord provides duplicate or similar coverage; it being the intent of the foregoing that in such circumstance Landlord’s policy will provide excess coverage over Tenant’s policy. Tenant is advised that Tenant’s personal property and fixtures are not covered under any of Landlord’s property insurance policies.

Reference:

Security Exchange Commission - Edgar Database, EX1A-6 MAT CTRCT.2 8 d33449dex1a6matctrct2.htm LEASE AGREEMENT, Viewed April 5, 2021, < https://www.sec.gov/Archives/edgar/data/1652238/000119312515311712/d33449dex1a6matctrct2.htm >.

Common Contracts with Insurance Clauses

Here are a few common contracts with insurance clauses:

Construction Contract

An insurance clause in construction contracts often deals with limitations around:

• Property damage
• Bodily harm
• Profit losses
• Third-party claims

The insurance policy often specifies covered events and waivers.

Lease Agreement

An insurance clause in lease agreements can require commercial tenants to hold renter’s insurance. These clauses protect the real estate property owner and tenant in case of fire, flood, or storm damage in lease agreements.

Learn more about an “other” insurance clause here.

Insurance Clause FAQs

Insurance clauses carry specific legal implications. Below, you can find important insurance clause FAQs:

Which elements are included in an insurance clause?

There are three elements included in an insurance clause:

• A party makes an offer
• Another party accepts it
• They both exchange consideration

What makes an insurance contract legally binding?

Insurance contracts are legally binding when they include the elements of an insurance clause with affixed party signatures. However, legal mistakes can render them unenforceable.

If you need legal advice, speak with insurance lawyers clauses in insurance policy today.