Short answer
The insurance section of your contract usually repeats the same clauses: additional insured, waiver of subrogation, primary and non-contributory wording, notice of cancellation, limits and named insured. Each clause touches a specific policy, and many can be met when the contract requires them in writing. Send the contract to your broker before you sign so any gap shows up early. Blanket endorsement wording varies by carrier, and this guide is not legal advice.
Do I need to ask my broker each time a contract arrives?
An office administrator at an engineering firm asked us: “So, we need to ask you each time for this? Or when we share insurance requirements, you are looking out for it?”
That question sits behind every contract. Our process is simple. When you send a contract, we review it. If we can’t meet a requirement or something is missing, we let you know. Sending it before you sign gives everyone time to fix a problem.
What does additional insured mean in a contract?
An additional insured endorsement extends a policy’s protection to another party, such as a client or contractor. It usually applies to general liability, and it can also apply to auto and umbrella policies. It generally isn’t available on professional liability.
What is a waiver of subrogation?
A waiver of subrogation stops your insurer from recovering what it paid from the party named in the contract. It can apply to general liability, auto and workers’ compensation, where the state allows it.
One firm asked whether its policies include waiver of subrogation rights. Avi’s answer was that it is included “when required by written agreement.” Many carriers work this way, though wording varies.
What does primary and non-contributory mean?
Primary means your policy responds first. Non-contributory means the client’s own policy doesn’t share in the loss. Contracts often ask for both on general liability. Carriers commonly offer this by endorsement when a written contract requires it, but the exact form differs. We don’t have a glossary entry for this term yet, so ask your broker to confirm the wording on your policy.
What does a 30-day notice of cancellation mean?
Many contracts ask that the client receive 30 days’ notice if a policy is cancelled. A notice of cancellation clause is a request in the contract, and carriers don’t always agree to send notice to certificate holders. Ask your broker what the carrier will actually do. Don’t assume the certificate promises it.
How do limits work in a contract requirement?
Limits of liability usually come in two forms. The per-claim or per-occurrence limit is the most the policy pays for one event. The aggregate is the most it pays across the policy period. Compare each required number to the matching number on your policy, and check which type the contract names.
Why does the named insured need to match the contract?
The named insured on your policy should match the party that signs the contract. If you operate under a DBA, the contract may expect it to appear on your certificate. One California architect checking a construction manager contract asked us to confirm that the policies met the insurance section and to show the DBA on the certificate so it matched. Our guide on how to read a COI shows where the insured name appears.
Why does “when required by written contract” matter?
Many endorsements apply only when a written contract requires them. If you start work before signing, the endorsement may not apply the way you expect. Sign the contract before the work begins, and send it to your broker before that.
Example: reviewing an insurance exhibit
Consider a hypothetical design firm that receives a contract with an exhibit asking for additional insured status, waiver of subrogation, primary and non-contributory wording, 30 days’ notice and specific limits. The firm sends it to its broker before signing.
The broker confirms most items can be met, notes that notice of cancellation depends on the carrier and asks the client to correct a request for additional insured status on professional liability. The firm signs a contract its policies actually match.
What to check before you sign
- Which policy each requirement names
- Whether the contract lists limits per claim, per occurrence or in the aggregate
- Whether the named insured and any DBA match the signing party
- Whether additional insured, waiver and primary wording apply “when required by written contract”
- Whether the contract asks for notice of cancellation
- Whether a state rule affects a workers’ compensation waiver
Send us the contract for a check before you sign.
Related questions
Do I have to send every contract to my broker?
It is the safest habit. Contracts with insurance exhibits are worth reviewing before signing so gaps surface early.
Does my policy include waiver of subrogation?
Often when a written agreement requires it, though it varies by carrier and policy. Ask your broker to confirm.
Will my insurer send the client a notice of cancellation?
Not always. Carriers differ, so ask what yours will do instead of relying on the contract language.
Can the client be additional insured on my professional liability policy?
Generally no. It usually applies to general liability, and sometimes to auto and umbrella.