Contract Type:
Generic Contract

Each party shall maintain appropriate insurance to cover its potential liabilities under this Agreement, including but not limited to professional indemnity insurance, public liability insurance, and product liability insurance. Each party shall provide evidence of such insurance to the other party upon request.


Here is a plain English explanation of the generic insurance clause:

- This clause requires both parties to have appropriate insurance policies covering potential liabilities related to the contract.

- The insurance should include professional indemnity insurance, public liability insurance, and product liability insurance, but may include other relevant policies too.

- Professional indemnity covers potential professional negligence claims. Public liability protects against injury or property damage claims from third parties. Product liability covers injury or damage caused by faulty products.

- The parties must be able to provide proof of the required insurance policies if the other party requests it.

- This ensures both parties are adequately insured against liabilities they may incur under the terms of the contract or through their work together.

- It provides risk management and transfers liabilities to insurers in the event of claims or losses arising.

- The clause protects the parties financially and gives them assurance the other is properly insured prior to undertaking the contractual obligations.

History of the clause (for the geeks)

The concept of contractual insurance requirements has its origins in maritime trade practices dating back centuries.

Shipowners would take out insurance to cover risks of cargo loss and ship damage. These policies would often be stipulated in charter agreements.

In the late 19th century, liability insurance emerged covering personal injury claims from industrial accidents. Companies like employers’ liability insurance arose. This filtered into commercial contracts needing coverage for potential harms to counterparties.

By the early 20th century, various liability policies were common in England. However contractual insurance stipulations remained rare initially. Courts were reluctant to impose implied insurance obligations.

Gradually, specific insurance clauses made their way into English contracts for services and sales. Parties wanted financial security against rising liability claims. Negligence lawsuits were increasing, as were product defect cases with consumer protection laws.

Insurance clauses became more widespread in English contracts by the 1970s and 80s. Professional indemnity and public liability policies were now routine for contractors and professionals. Companies mandated these through contracts.

Today, English commercial parties see insurance requirements as indispensable risk management tools. Each side desires assurance of coverage. Contracts may even dictate minimum policy values, seeking sufficient financial protection.

Insurance clauses thus emerged from maritime practices to become pillars of modern English commercial contracting.