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Glossary

LiabilityUpdated Sep 23, 2026

What Is an Insurance Clause in a Contract?

An insurance clause requires one or both parties to carry specific types of insurance — such as general liability or professional liability — at stated minimum amounts, and often to name the other party on the policy. Missing coverage can put a party in breach before any work starts.

Analyze my contract — freeFull mechanics: How to Review a Vendor Agreement Before You Sign (2026)

Why it matters

Insurance is a real cost, and missing coverage can put you in breach before any work starts. The required amounts are sometimes copied from much larger deals.

How common is it?

In the 510 public-company commercial contracts of the CUAD dataset (The Atticus Project, CC BY 4.0), 166 (32.5%) contain an insurance requirement.

Among contract types with at least 20 contracts in the set, it shows up most in development agreements (11 of 29), endorsement agreements (9 of 24) and sponsorship agreements (11 of 31).

These are larger-company deals, not a sample of every contract — a reference point, not a rule. Full method: /data/cuad.

What to watch for

  • Coverage types or amounts you do not currently carry.
  • A requirement to name the other side as “additional insured.”
  • Proof of coverage due before signing, with no time to arrange it.

A realistic example

A freelance photographer signs a brand contract requiring $2 million in professional liability cover. Buying it for one shoot would cost more than the shoot pays.

What to ask for

  1. Amounts that match the size of the deal, or an exception for the coverage you already carry.
  2. 30 days after signing to provide a certificate of insurance.

Related terms: indemnification · limitation of liability · uncapped liability

Related guide: How to review a vendor agreement

See how the insurance clause reads in your contract — 👉 Analyze your contract free — your first analysis is free, no card, no deadline to use it.

Not legal advice. This is an educational definition of a common contract term. Details vary by jurisdiction — this page explains common U.S. usage. For high-stakes agreements, have a lawyer review the final version.