Insurance Law Lesson 33: Insured Contract

The CGL exclusion for contractual liability has an exception for liability assumed in an “insured contract.”

The ISO CGL defines insured contract as one of 6 kinds of contract:

  1. A premises lease (except for fire damage indemnification)
  2. A sidetrack agreement (this regards railroads)
  3. Easements or license agreement (except for construction/demo or near railroad)
  4. Indemnification of municipality (unless in connection with work for a municipality)
  5. An elevator maintenance agreement
  6. The insured’s agreement to assume the tort liability of another party

In my experience, (f) has been the most common. But, (f) does not apply to multiple types of railroad operations, and there are broad carve outs for contracts that would indemnify architects/engineers/surveyors. A complete reading of that definition (multiple times) is necessary for a proper coverage analysis.

Recall that we are discussing an exception to an exclusion, not a coverage grant. Liability in an insured contract is not subject to the contractual liability exclusion. But, such liability still must fall within the policy’s coverage grant and could be subject to the policy’s other exclusions.

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