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
3 risks identifiedCoverage 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
ChecklistWhat policies and limits are required?
Must certificates of insurance be provided?
Are additional insured or waiver of subrogation requirements included?
Negotiation ideas
ActionableLimit 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
1 questionsWhy 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
Indemnity
An indemnity clause requires one party (the indemnifier) to compensate the other (the indemnified party) for specified losses, costs, or claims — including third-party claims brought against them.
Limitation of Liability
A limitation of liability clause caps the maximum financial exposure of one or both parties under a contract.
Want help reviewing the full contract?
A single clause rarely tells the whole story. Scan the full agreement to spot risks, missing protections, and negotiation points across the whole document.