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This insurance protects the insured person in the event a loss occurs for which he has assumed liability, express or implied, under a written contract. For example, under most construction agreements with a municipality, the contractor agrees to “hold the municipality harmless” for any accidents arising out of the job.

Contractual Liability Insurance would thus protect the contractor from any loss for which the municipality would be liable in connection with the construction. The bottom line is that contractual liability coverage is needed over and above the commercial general liability cover. It is another way to protect the business from financial catastrophe.

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Contractual Liability Insurance provides coverage for bodily injury or property damage that the insured person is obligated to pay because they assumed the liability in a contract or agreement.


Individuals and organizations that sign indemnification agreements should protect themselves through purchase of Contractual Liability Insurance.

An indemnity agreement is a risk transfer mechanism in which one party is transferring risk to another party. In an indemnity agreement, one party, the “indemnitor”, agrees to “indemnify” the other party, the “indemnitee” for things spelled out in the indemnity clause.


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