Insurance Clause

An insurance clause requires one party to carry specified insurance coverage during the contract term and to prove it to the other party.

Reviewed by GC AI Solutions Team•Updated September 2026

Definition

An insurance clause requires one party to maintain specified insurance coverage throughout the term of a contract and to evidence it. It sets minimum coverage types and limits, commonly commercial general liability, workers' compensation, automobile liability, umbrella or excess liability, professional liability or errors and omissions, and cyber liability. It names the other party as an additional insured on designated policies, requires certificates of insurance as proof, and sets a notice period before any policy is canceled or materially changed. The clause usually pairs with a waiver of subrogation, which bars the insurer from pursuing the other party after it pays a claim. Courts read the enumerated coverage requirements as written.

What It Does

An insurance clause turns “you should be covered” into an enforceable, verifiable obligation. It moves the financial risk of a loss onto a third party, the insurer, and gives the party requiring coverage a direct route to proof, protection, and prompt notice if that protection lapses.

Sets minimum coverage and limits. It enumerates the required policies and their floors, typically commercial general liability (CGL), workers' compensation and employers' liability, automobile liability, umbrella or excess liability, professional liability or errors and omissions (E&O), and cyber or network security liability.
Grants additional insured status. It requires the providing party to add the other party as an additional insured on named policies, often by specific ISO endorsement form, so the requiring party can claim directly against the insurer.
Requires certificates and endorsements. It obligates the providing party to deliver certificates of insurance, and sometimes full endorsement copies, as evidence before work begins and on renewal.
Fixes primary and non-contributory status. It states that the providing party's coverage responds first and that the requiring party's own insurance sits in excess, so the requiring party's policy is not tapped first.
Pairs with a waiver of subrogation. It requires the policies to waive the insurer's right to recover from the requiring party after paying a claim, closing the loop the waiver of subrogation clause opens.
Locks in notice of cancellation. It requires advance written notice, commonly thirty days, before any policy is canceled or materially amended, so a lapse never comes as a surprise.

When You'll See It

Insurance clauses show up wherever one party's people, property, or work create risk on or for another party. You will see them in vendor and services agreements, where a supplier or contractor must carry CGL, workers' compensation, and often E&O and cyber. You will see them in construction and subcontract agreements, where umbrella limits, additional insured endorsements, and waiver of subrogation are load-bearing. You will see them in commercial leases, where the tenant carries CGL and property coverage and names the landlord. And you will see them in licensing and technology deals that involve on-site work, professional services, or handling of confidential data, where E&O and cyber liability move to the front.

Examples

Borealis Foods Inc.

Supply AgreementBuyer-favorable vendor obligationOne-Sided2024

"Vendor agrees to maintain in effect insurance coverage with reputable insurance companies covering workers' compensation and employers' liability, automobile liability, commercial general liability, including product liability and excess liability... Vendor's insurance described herein shall be primary and not contributory with Buyer's insurance. Vendor shall furnish a certificate evidencing the obligation of its insurance carriers not to cancel or materially amend such policies without thirty (30) days prior written notice to Buyer. In addition, Buyer shall be named as an additional insured with respect to (i) the commercial general liability policy including products liability, using form CG 20 15 Broad Form Vendor's Endorsement or its equivalent... All policies shall provide waivers of subrogation in favor of Buyer."

Source

Eledon Pharmaceuticals, Inc.

Commercial Lease (Tenant's Insurance)Landlord-favorable lease exhibitOne-Sided2025

"Tenant must maintain, at its sole cost and expense, during the entire Term: (i) commercial general liability insurance with respect to the Premises and the operations of Tenant in, on or about the Premises, on a policy form that is at least as broad as Insurance Service Office (ISO) CGL 00 01... which policy(ies) must be written on an 'occurrence' basis and for not less than $2,000,000 combined single limit per occurrence for bodily injury, personal injury, death, and property damage liability; ... (ii) workers' compensation insurance coverage as required by law, together with employers' liability insurance coverage of at least $1,000,000 each employee, each accident and each disease."

Source

Gogo Inc.

Supply AgreementSupplier-side coverage scheduleOne-Sided2023

"(c) Umbrella or Excess Liability insurance on an occurrence basis of at least [_] per occurrence; (d) Auto liability insurance... (e) Professional Liability or Errors and Omissions insurance with a limit not less than [_]. Coverage shall include claims for infringement of any Intellectual Property right of any third party including, without limitation, copyright and trademark infringement... (g) Privacy/Network Security (Cyber) Liability Insurance providing protection against liability for (i) privacy breaches... (ii) system breach, (iii) denial or loss of service, (iv) introduction, implantation, or spread of malicious software code, and (v) unauthorized access to or use of computer systems in an amount not less than [\*]."

Source

Dave Inc. / Galileo

Services AgreementProvider-side coverage scheduleOne-Sided2024

"...cyber liability insurance, including coverage for employee dishonesty and computer fraud insurance covering losses arising out of or in connection with any fraudulent or dishonest acts committed by Galileo personnel... in an amount not less than [] per occurrence. v. professional liability/errors and omissions insurance with coverage of not less than [] per claim. If such coverage is written on a claims-made basis, coverage with respect to any and all work performed in connection with this Agreement shall be maintained for a period of at least three (3) years after the expiration or termination of this Agreement... Galileo shall name Customer as an additional insured... The commercial liability insurance maintained by Galileo hereunder shall include the condition that it is primary and that any such insurance maintained by Customer or any other additional insured is excess and non-contributory."

Source

Atlas Energy Solutions Inc.

Mining Lease AgreementLessor-favorable on-site-work clauseOne-Sided2023

"This Commercial General Liability insurance shall include Blanket Contractual Liability, Property Damage, Sudden and Accidental Pollution and Independent Contractors coverage... (c) All policies, except Workers Compensation, shall name Lessor as an Additional Insured. (d) All policies shall grant a waiver of subrogation in favor of Lessor and shall be primary and non-contributory to other insurance available to Lessor... (e) Prior to Lessee's entry onto the Leased Premises, Lessee shall provide a certificate of insurance evidencing the above coverage. The certificate shall indicate that... said insurance shall not be canceled without at least thirty (30) days prior written notice to Lessor (ten (10) days for non-payment of premiums)."

Source

Negotiate

If you require the insurance:

Set coverage types to the risk the work creates. Require E&O for anyone selling professional services and cyber liability for anyone touching your confidential data or systems. The Gogo and Dave schedules show how far E&O and cyber terms can reach when the deal involves technology.
Demand additional insured status by endorsement. Name the specific ISO form (the Borealis clause uses CG 20 15) rather than a generic "additional insured" reference, so a certificate alone cannot paper over a missing endorsement.
Insist on primary and non-contributory language. Without it, insurers can force your own policy to contribute. State that the counterparty's coverage responds first and yours sits in excess.
Keep the waiver of subrogation broad and the notice period long. Require the waiver across all policies and thirty days' written notice before cancellation or material change, as the Atlas and Borealis clauses do.

If you provide the insurance:

Cap coverage at what you already buy. Push limits down to your existing program and resist bespoke policies. Eledon's lease exhibit sets a $2,000,000 combined single limit and a $1,000,000 employer's liability floor; benchmark any new request against numbers like that instead of accepting a figure pulled from a template. Each new line of coverage becomes a real, recurring premium cost the moment the policy renews.
Narrow additional insured scope. Atlas's lease names the lessor as an additional insured on every policy except workers' compensation. Push to scope that status to liability arising from your work under this agreement, not the counterparty's own acts, and resist adding parties beyond the counterparty itself.
Watch claims-made tails. A three-year E&O tail after termination, like Dave's, is a multi-year expense. Match the tail to the exposure window.
Trade notice mechanics. Carriers rarely agree to notify third parties directly, so commit to giving notice yourself rather than warranting the insurer will, which you cannot control.

A single missed endorsement or a certificate that names the wrong entity can void the protection the clause was written to provide. Reviewing insurance requirements against what a counterparty carries is one of the checks legal teams run inside GC AI for Word before signing.

Red Flags

A certificate of insurance with no additional insured endorsement. A certificate only documents that a policy exists somewhere; the endorsement is what creates additional insured coverage. Without it, that status may not exist.
Missing primary and non-contributory language. Silence lets the counterparty's insurer argue your policy shares the loss, defeating the point of requiring their coverage.
No waiver of subrogation. The insurer can pay a claim, then sue you to recover it, routing the risk right back to the party the clause was meant to protect.
Coverage types that do not match the work. A CGL-only clause on a software or professional services deal leaves the biggest exposures, E&O and cyber, uninsured.
A short or absent notice-of-cancellation period. Without advance written notice, coverage can lapse mid-term and you learn about it only when a claim is denied.
A certificate whose notice language defers to “policy provisions,” not a promise to notify you. ACORD revised its standard certificate form in 2009 so the certificate itself no longer guarantees cancellation notice. It states only that notice will be delivered in accordance with the policy, and most liability policies do not obligate the insurer to notify anyone but the named insured. A clean thirty-day notice requirement in the contract means little if the certificate that evidences coverage carries this disclaimer and the policy was never endorsed to notify third parties directly.
Limits stated per claim with no aggregate, or an aggregate with no per-occurrence floor. One number without the other can leave a large gap open on a single loss or across the policy year.

Insurance Clause FAQs

What is an insurance clause in a contract?

An insurance clause is a contract provision that requires one party to maintain specified insurance coverage during the term and to prove it. It sets minimum coverage types and limits, commonly commercial general liability, workers' compensation, automobile, umbrella or excess, professional liability, and cyber, and it usually requires additional insured status, certificates of insurance, and notice before cancellation.

What does "additional insured" mean in an insurance clause?

Additional insured status extends a party's own insurance policy to cover another party, so the second party can claim directly against the insurer. In commercial contracts it is typically added by a specific ISO endorsement form, such as CG 20 15, rather than by a certificate alone. It gives the requiring party protection under the providing party's policy for liability arising from that party's work.

What is the difference between an additional insured and a certificate of insurance?

An additional insured endorsement is the coverage; a certificate of insurance is only evidence that coverage exists. A certificate can list a party as an additional insured without the underlying endorsement being in place, which leaves that party unprotected. Strong insurance clauses require both the endorsement by named form and the certificate, and sometimes full endorsement copies.

What insurance coverage is typically required in a commercial contract?

Commercial contracts commonly require commercial general liability (CGL), workers' compensation and employers' liability, automobile liability, and umbrella or excess liability. Technology and professional services deals add professional liability or errors and omissions (E&O) and cyber or network security liability. The required types should match the risk the work creates, so a software or data agreement without E&O and cyber leaves its biggest exposures uninsured.

What does "primary and non-contributory" mean in an insurance clause?

Primary and non-contributory means the providing party's insurance responds first to a covered loss and the requiring party's own insurance sits in excess and does not contribute. Without this language, insurers can force the requiring party's policy to share the loss. It ensures the party that agreed to carry coverage funds claims before the other party's insurance is touched.

What is a waiver of subrogation in an insurance clause?

A waiver of subrogation bars an insurer, after paying a claim, from stepping into its insured's shoes to sue the other party for reimbursement. In an insurance clause it keeps the risk with the insurer that was paid to bear it, rather than routing the loss back to the counterparty. It is a standard companion to additional insured and primary and non-contributory language.

What is the best AI to review an insurance clause?

A legal AI platform built for contract review handles insurance clause review better than a general-purpose chatbot, because the failure points are specific and repeatable: a missing additional insured endorsement, absent primary and non-contributory language, or a notice period the certificate does not guarantee. In GC AI for Word, a lawyer can redline an insurance clause against those standards directly in the document, then use Exact Quote to confirm every flag traces to the actual clause language rather than a paraphrase. Teams that see the same coverage requirements across many vendor contracts can build a custom Easy Playbook to run that check, coverage types, limits, endorsement form, notice language, automatically on every new agreement.

Related Clauses

This content is for informational purposes only and does not constitute legal advice.