DEFINITION OF ‘BLANKET CONTRACTUAL LIABILITY INSURANCE’
Liability insurance that provides coverage for all contracts in which the insured is assuming liability. Blanket contractual liability insurance is most commonly used in situations in which a business is working with a third party, and especially if that third party is using the business’ property. The policy is designed to be automatically applicable to any agreement that the business may sign.
INVESTOPEDIA EXPLAINS ‘BLANKET CONTRACTUAL LIABILITY INSURANCE’
Businesses are more than willing to accept payment from other companies, but are much less willing to accept risks that come along with the arrangement. In order to protect itself, a business may require other companies to maintain various types of liability insurance policies. These policies protect both the insured party and the parties that the insured works with.
In most cases a business will need to provide proof that it has insurance by a certain deadline. If the deadline passes before proof is provided than the business will not be allowed to begin work. The business may be required to add other parties to the policy in order to protect them against risk.
For example, a large, multi-day software industry conference allows companies to showcase their offerings in the exhibition hall. The exhibitors bring their own material and set up their own booths. In order to be allowed to exhibit the participating company may be asked to provide a certificate indicating that it has commercial liability insurance, contractor’s personal injury insurance, and blanket contractual liability insurance. The conference may require policy limits over a certain limit, both for per occurrence and aggregate liabilities. If the company doesn’t have a blanket contractual liability insurance policy the conference organizers may suggest an insurer to work with.
A business with a blanket contractual liability insurance policy may still want to purchase a separate liability policy to protect against a specific risk, even if only for a short-term.