Clause guide
Insurance Clause clause: meaning, risks, and what to negotiate
Requires one or both parties to carry specified insurance coverage.
What it means
Insurance clauses can shift risk management costs and affect whether there is coverage for key claims.
Common risks
- • Coverage requirements may be too expensive or hard to obtain.
- • The contract may require unnecessary policy types.
- • You may need to add the other party as an additional insured.
What to check before signing
- • What policies and limits are required?
- • Must certificates of insurance be provided?
- • Are additional insured or waiver of subrogation requirements included?
Negotiation ideas
- • Limit coverage to commercially reasonable policies.
- • Align insurance levels with the actual risk profile.
- • Avoid unnecessary additional insured obligations where possible.
Example clause
“Provider shall maintain commercially reasonable insurance coverage, including general liability insurance, and provide certificates upon request.”
Frequently asked questions
Why do contracts include insurance clauses?
They help ensure that some risks are backed by insurance coverage rather than only by the party’s balance sheet.
Related clauses
Want help reviewing the full contract?
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