What is an insurance clause?

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Sometimes an agreement involves cargo or products that, if lost, would create more liability than either party is willing to accept.  In these situations, where the risk of loss is disproportionally larger than the contract price, the parties may agree to include an insurance clause to ensure that, if the cargo is lost or destroyed, neither party will have to pay for the damage.

Usually, an insurance clause will state what type of insurance and in what amount will need to be purchased as a condition of the contract.  Furthermore, it establishes which party, or both, will need to pay for it.  In longer term agreements the insurance clause may contain requirements about keeping premiums current and ensuring that the level of coverage does not drop.

Please contact our office if you would like further information regarding insurance clauses.