It is customary for businesses to assume liability in a contract. These contracts are usually referred to as hold harmless agreements or indemnification agreements, an agreement where one party accepts responsibility for the other party’s negligence. Although it is not standard for an insurance policy to provide liability coverage for anyone else but the policyholder, a typical Commercial General Liability policy does provide some coverage for certain frequently used business contracts.
Here are 5 of the most common coverages:
- Lease of premises (but not for liability assumed due to fire damage to a premises you occupy or rent)
- Sidetrack agreement
- Easement or license agreement (except in connection with construction or demolition operations on or within 50 feet of a railroad)
- Indemnification of a Municipality (except in connection with work for a municipality)
- Elevator maintenance agreement
There are however, particular conditions contained in the policy that limit the coverage for these contracts. For example, coverage is not provided to architects, engineers or surveyors for their professional services as a professional liability policy is more appropriate for these occupations. Furthermore, personal or advertising injury is not covered; just bodily injury or property damage claims are covered. A personal injury claim is defined as libel or slander.
It is always a good idea to evaluate all of the contracts you sign. This will determine whether you are assuming liability, and if so, to check with your insurance agent if you are covered for such agreements. You can also get a Michigan commercial insurance quote by calling (734) 421-9900.