Contractual Liability Insurance
While most businesses carry general liability insurance, there’s one critical gap many overlook: contractual liability insurance. And that gap could cost you everything.
What Is Contractual Liability Insurance?
Contractual liability insurance protects your business from liabilities you assume when entering into a contract with another party—especially when you’re hired as a subcontractor or third party.
While general liability insurance covers you when you’re working directly for a homeowner or business, it doesn’t protect you from obligations outlined in contracts with general contractors or other companies. That’s where contractual liability insurance steps in.
The Risk: Indemnity Agreements
(a.k.a. “Hold Harmless” Clauses)
Nearly every contract includes an Indemnity Agreement, which legally shifts all liability to you. That means:
- If someone sues the general contractor, you pay the legal costs.
- If damages are awarded, you cover them—even if the incident wasn’t your fault.
Standard Contractual Liability Insurance
- You must list each contract individually in the policy.
- If a contract isn’t listed, it’s not covered.
- You’ll need to update your policy every time you take on a new contract.
Best for businesses with only a few long-term contracts and minimal turnover.
Blanket Contractual Liability Insurance
- Automatically covers all current and future contracts.
- No need to update your policy every time you sign a new agreement.
- Offers comprehensive protection across all jobs.
Best for busy contractors, freelancers, and service providers working on multiple or fast-changing projects.
Ready to Get Covered?
Don’t let one overlooked clause ruin everything you’ve built. Contact Melton McFadden today to discuss your needs, get a personalized quote, and make sure your contracts don’t become a liability.