Insured contract
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Insured contract belongs to insurance terminology and refers lease agreements. It refers to that part of any other contract or agreement relating to your business under which you are liable to another person for payment of personal injury or damage to property to a third party or organization [1]. The policy eliminates any contractual liability, unless the insurance contract says that. If liability arises under the insurance contract, the policy may cover third party lawyer's fees, legal costs and defense costs provided that they were all mentioned in the insurance indenture[2].
Insured contract according to The Commercial General Liability
The Commercial General Liability (CGL) circumscribe six essentials contracts which all constitute the insured contract. These contracts are such as following[3]:
- Lease of premises - Is a contract signed between landlord and tenants in which tenants agrees to hold the landlord harmless and indemnify it some accident take place. That means and determinate that the landlord does not take responsibility for any accidents that happens in a rented place [4].
- Sidetrack agreement - This is a contract with a railroad company to accept responsibility for the rairoad focus associated with your company's location[5].
- License agreement - This agreement is similar to the lease agreement, which provides that the lease allows you to take possession of the property and occupy the premises[6].
- An obligation as required by ordinance to indemnify a municipality This agreement refers to sentence which claims „a city law that requires someone to make the city whole”. This means that in situation where someone got injured on a pavement in front your business location, the business must make to city whole which means that this business will take responsibility for this accident[7].
- Elevator maintenance agreement - This agreement has to be signed only if the building has an elevator in it[8].
- Tort liability assumed by the named insured - A tort refers to a civil wrong. The most common tort occurring in insurance cases is tort of negligence[9].
Examples of Insured contract
- Professional Liability Insurance: Professional liability insurance is a type of insurance that provides protection for professionals in the event that they are sued for any negligence or malpractice claims. It covers the costs associated with defending and settling the claim, as well as any damages awarded if the professional is found liable.
- Product Liability Insurance: Product liability insurance is a type of insurance that protects a business from lawsuits brought by consumers who have been injured or had their property damaged due to a product that the business manufactured, sold, or supplied. It covers the costs associated with defending and settling the claim, as well as any damages awarded if the business is found liable.
- Errors and Omissions Insurance: Errors and omissions insurance is a type of insurance that provides protection for professionals in the event that they are sued for any errors or omissions in their work. It covers the costs associated with defending and settling the claim, as well as any damages awarded if the professional is found liable.
- Commercial Liability Insurance: Commercial liability insurance is a type of insurance that provides protection for businesses in the event that they are sued for any negligence or malpractice claims. It covers the costs associated with defending and settling the claim, as well as any damages awarded if the business is found liable.
Advantages of Insured contract
Insured contracts provide several advantages for both parties involved. These include:
- Financial protection: Insured contracts provide financial protection to both parties involved in the agreement by transferring liability away from the individual to the insurer. This means that any damages or losses incurred due to a breach of the contract are covered by the insurer, rather than the individual.
- Security: Insured contracts provide a greater level of security than an agreement without insurance. This is because the insurer is legally obligated to pay out on claims, reducing the risk of non-payment.
- Peace of mind: Having an insured contract can provide peace of mind to both parties that their obligations will be fulfilled, even if something goes wrong. This can help to build trust between the two parties and ensure that the contract is fulfilled.
Limitations of Insured contract
- Insured contracts are limited to the terms of the agreement between the insured and the insurer.
- The insurer is not responsible for any damages or losses that may result from breach of contract.
- The insurer may not be able to provide coverage for all risks associated with the contract.
- The insurer may not cover any additional costs or expenses incurred by the insured while performing the contract.
- The insurer may not be able to provide coverage for any unexpected risks associated with the contract.
- The insured may be required to pay additional premiums for the coverage provided.
- The insured may be responsible for any legal fees associated with the contract.
- The insurer may not provide coverage for any losses or damages caused by the insured’s negligence.
- The insurer may not be able to provide coverage for any losses or damages caused by a third party.
Insured contracts are essential for protecting businesses from liability for personal injury or damage to property to third parties or organizations. There are several other approaches associated with them, such as:
- Risk management: Risk management is the process of identifying, assessing, and controlling risks associated with operations or activities. It involves identifying potential risks, evaluating their severity, and deciding how to respond to them.
- Insurance coverage: Insurance coverage is a form of risk management that provides financial protection against the risk of loss. It can cover a variety of risks, such as property damage, business interruption, and employee injuries.
- Legal contracts: Legal contracts are agreements between two or more parties that are legally binding. These contracts can contain provisions related to insured contracts, such as indemnification, which provides protection for parties in the event of a breach of the agreement.
- Claims handling: Claims handling is the process of managing the administrative aspects of settling insurance claims. This includes gathering the necessary documents, negotiating with insurers, and ensuring that the claim is paid in a timely manner.
In summary, insured contracts are essential for protecting businesses from liability for personal injury or damage to property to third parties or organizations. Other approaches related to insured contracts include risk management, insurance coverage, legal contracts, and claims handling.
Footnotes
References
- Boggs J.C. (2011), ‚ Wow! I Never Knew That! 12 of the Most Misunderstood and Misused P&C Insurance Coverages, Concepts and Exclusions , Lulu.com
- Kealy D. (2015), ‚ Understanding the Commercial General Liability Policy , Lulu.com
- Kealy M.D. (2014), Understanding named, automatic and additional insureds in the CGL policy, lulu.com
- Micklitz H. (2014), Constitutionalization of European Private Law: XXII/2 , OUP Oxford
- Moelmann R.L. (2009), The Law of Performance Bonds, American Bar Association
- Palmer W.J., Maloney M.J. , Heffron L.J. (1996), ‚ Construction Insurance, Bonding, and Risk Management , McGraw Hill Professional
Author: Veniamin Terokhin
