Plain-English guidance for navigating the insurance language hiding in your agreements.
Contracts are a routine part of doing business — especially in construction, manufacturing, tech,
and professional services — but the insurance requirements inside them are often anything but routine.
- Some requirements are straightforward.
- Some are outdated.
- Some shift unexpected liability onto your business.
- And some can void coverage entirely if they’re not met.
Most importantly: your contract obligations don’t automatically match your insurance policies.
And that gap is where businesses get into trouble.
This guide breaks down the insurance concepts that show up in contracts most often — and what they actually mean for your coverage.
1. Additional Insured: More Than a Certificate Box
When you sign a contract, you’re often required to add another party (an owner, GC, landlord, or client) as an additional insured on your policy.
That sounds simple, but the details matter.
Common issues we see:
- Only “ongoing operations” are covered — but the contract requires “completed operations”
- The endorsement used doesn’t match the contract language
- Your limits are shared with the additional insured, reducing your own protection
- The additional insured status applies only to certain jobs or locations
Plain-English translation:
Being listed on a certificate doesn’t mean you actually met the contract requirements. The endorsement attached to your policy is what counts.
The fix:
Match endorsement language to your contract — not whatever the carrier defaulted to.
2. Primary & Noncontributory: Who Pays First Matters
Many contracts require your insurance to respond before the other party’s insurance and without
seeking contribution from their policies.
This is called primary & noncontributory.
If you don’t have this endorsement:
- Claims may take longer to resolve
- The contractual relationship can be violated
- Your policy may respond differently than intended
- You could be responsible for costs you thought were transferred
Plain-English translation:
The contract wants your policy to take the lead — not to share the bill.
The fix:
Confirm your GL and Auto policies include a primary & noncontributory endorsement when the contract calls for it.
3. Waiver of Subrogation: Preventing the Insurance “Blame Game”
A waiver of subrogation means your insurer cannot pursue the other party (owner, GC, landlord, etc.) after paying a claim — even if that party contributed to the loss.
Contracts often require this to avoid finger-pointing and legal disputes on jobs.Risk if it’s missing:
Your carrier may pay the claim but then turn around and pursue the other party — putting you in violation of the contract you signed.
Plain-English translation:
Waiver of subrogation = “My insurer won’t go after you, even if they want to.”
4. Specific Limits and Coverage Types
Contracts frequently require:
- Higher limits than your current policy
- Separate limits for completed operations
- Pollution coverage
- Professional liability
- Auto liability above statutory minimums
- Technology or cyber coverage (increasingly common)
What matters most is alignment between:
- What your contract requires
- What your policy actually provides
If these don’t match, your business carries the leftover risk.
Plain-English translation:
If your limits or coverages fall short of the contract, you may be responsible for the difference.
5. Completed Operations Requirements
This is one of the most overlooked areas — especially in construction and service industries.
Many jobs require ongoing and completed operations additional insured coverage, meaning:
- You must provide protection during the project AND
- You must continue that protection after the work is finished
Some endorsements expire automatically unless they’re written correctly.Plain-English translation:
Your responsibility doesn’t end when the job ends — and your insurance needs to reflect that.
6. Insurance for Subcontractors (and Why It Affects Your Policy)
Contracts increasingly require contractors to ensure all subs carry:
- GL
- Auto
- Workers’ Compensation
- Additional insured endorsements
- Waivers of subrogation
- Adequate limits
If a subcontractor doesn’t meet those requirements:
- You might unintentionally absorb their risk
- Claims can fall back on your policy
- You could be in breach of contract
- Your insurance company could deny coverage
Plain-English translation:
Your subs’ insurance becomes your problem if their policies don’t meet the contract.
7. Certificates of Insurance (COIs): Helpful, but Not Enough
A COI:
- Shows a policy existed on the day it was issued
- Does not verify endorsements
- Does not confirm limits meet contract specs
- Does not guarantee coverage later
- Does not show exclusions
Many businesses assume a COI is “proof” of compliance. It’s not — and that assumption causes more disputes than any other contract-related issue.Plain-English translation:
A certificate is not a contract review. It’s just a receipt.
8. Why Contract Review Matters More Than Ever
The most expensive insurance disputes we see happen when:
- The contract requires something the policy doesn’t provide
- A subcontractor isn’t compliant
- A missing endorsement gets discovered after a claim
- A limit doesn’t meet the project specs
- The contract shifts unexpected liability downstream
A 15-minute contract review can prevent:
- Denied claims
- Legal disputes
- Project delays
- Out-of-pocket expenses
- Lost bids
You don’t need to be an insurance expert — you just need someone who can explain what’s required and what it means.
Final Thought
Contracts are designed to shift risk — and unless your insurance program matches the contract language, that risk may land squarely on your business.
Understanding the requirements, closing the gaps, and verifying your subs all protect you long before a claim ever happens.
And the good news?
You don’t have to navigate the fine print alone.
If you’re reviewing a contract or aren’t sure whether your insurance meets the requirements, we can help you break it down before issues arise.