Worked Quotes and Buying Checklists
Insurance clauses in contracts and tenders: additional insured, waiver of subrogation and limits
How to read and meet the liability insurance requirements in Indian client contracts, leases and tenders, with a clause-by-clause checklist and cost examples.
Before signing an Indian client contract, lease or tender that mentions insurance, extract every requirement into a list (policy type, minimum limit per occurrence and in aggregate, maximum deductible, additional insured, waiver of subrogation, cross liability, primary and non-contributory wording, notice of cancellation, and the duration cover must be kept), then send that list to your insurer or broker and get written confirmation that each item can be met and at what cost. An indemnity clause in which you promise to "indemnify and hold harmless" the client is a separate promise from the insurance clause, and your liability policy may not cover all of it. Agreeing to requirements your policy cannot meet can put you in breach even if no accident ever happens.
This guide belongs to the liability insurance buying checklist. It is general information; have important contracts reviewed by a lawyer. Contract terms usually drive two other decisions: the limit of indemnity and the deductible.
The clauses you will meet
| Clause | What the client wants | What to ask your insurer |
|---|---|---|
| Required cover and limit | "CGL with a limit of not less than ₹X per occurrence" | Is my policy CGL? Is the AOA at least ₹X? Is the aggregate adequate? |
| Additional insured | The client is covered by your policy for liability arising from your work | Can you add the client by name, and only for liability arising from our work? |
| Waiver of subrogation | Your insurer will not recover from the client after paying a claim | Can you endorse a waiver for this client? |
| Cross liability | Each insured treated as if separately insured | Is cross liability included, so claims between insureds are covered? |
| Primary and non-contributory | Your policy pays first, without sharing with the client's own policy | Can the policy be endorsed this way? |
| Notice of cancellation | Client told before your cover is cancelled | Can the insurer give notice to a third party, or must I? |
| Maximum deductible | Deductible not above ₹Y | Is my deductible within the limit? |
| Period of cover | Policy kept in force during the contract and for a period after completion | Can I keep completed-operations cover, or buy it for the extra years? |
| Certificate of insurance | Evidence before work starts | Will you issue a certificate showing these terms? |
Indemnity clauses vs insurance clauses
An indemnity clause allocates liability between you and your client, for example: "The contractor shall indemnify the employer against all claims arising from the works." An insurance clause requires you to buy policies. Liability policies normally cover your legal liability, the liability the law would place on you anyway, and exclude contractual liability you take on beyond that, unless the wording covers "insured contracts" or the insurer agrees an extension.
Example
A contract says you will indemnify the client for "all losses, howsoever caused, including the client's own negligence". If the client's own employee causes an accident on site, the law may place liability on the client, but your contract shifts it to you. Your CGL may not pay, because the liability arises only from the contract. Negotiate the clause to cover losses "to the extent caused by the negligence of the contractor", or ask the insurer whether an extension is available.
Government and PSU tenders
Tender documents for works and services commonly require contractors to hold:
- Contractor's all risk or erection all risk cover for the works
- Third-party liability cover, sometimes with a specified limit per occurrence
- Employees' compensation cover, or proof of ESI registration, for workers employed
- Motor third-party cover for vehicles used on the project
Requirements and amounts vary by tender. Read the general conditions of contract and the special conditions, and include the insurance cost in your bid price. Missing a requirement can lead to rejection of a bid or a deduction from running bills.
Leases and malls
Commercial leases, especially in malls and business parks, often require tenants to buy public liability cover naming the landlord or facility manager, and to waive recovery against the landlord. Check that the property address in the policy matches the leased unit and that fit-out works are covered during the fit-out period.
Worked example: cost of meeting a contract
An interior fit-out firm (illustrative) has CGL with ₹50 lakh AOA / ₹1 crore AOY, deductible ₹25,000, premium ₹32,000 + GST. A new client contract requires:
- ₹1 crore per occurrence
- Client as additional insured with waiver of subrogation
- Deductible not more than ₹50,000
The insurer quotes:
| Change | Additional premium before GST |
|---|---|
| Increase AOA to ₹1 crore and AOY to ₹2 crore | ₹10,500 |
| Additional insured and waiver for named client | ₹2,000 |
| Total additional | ₹12,500 |
| GST at 18% | ₹2,250 |
| Total extra cost | ₹14,750 |
If the contract value is ₹60 lakh, the extra cost is about 0.25% of contract value. Include it in the price. You can compare limit options using the quote comparison tool.
Checklist before you sign
- Extract every insurance and indemnity requirement into a single list
- Ask your insurer or broker to confirm each item in writing
- Negotiate unlimited or "howsoever caused" indemnities to fault-based wording
- Check how long completed-operations cover must continue after handover
- Price the cost into your bid or quotation
- Diary renewal dates against contract duration, so the policy never lapses mid-project
- Keep the endorsement and certificate with the contract file
The liability cover checklist records these as part of the buying process.
Frequently asked questions
Is a certificate of insurance the same as the policy?
No. A certificate is a summary. The policy wording and endorsements decide what is covered.
Can I add every client as additional insured?
Insurers may agree a blanket additional insured endorsement for clients where a written contract requires it. Otherwise, each client is added by name.
What is "primary and non-contributory"?
It means your policy responds first and does not ask the client's insurer to share the loss. Many insurers can endorse this for specific contracts.
My client wants a ₹5 crore limit for a small job. What now?
Ask for a quote, but also negotiate. Large limits for low-risk work may be a standard template; clients often accept a reasoned lower limit.
Sources
- IRDAI — registered insurers and brokers
- Government e-Marketplace — public procurement terms for sellers and service providers
- India Code — Indian Contract Act, 1872 (sections 124 to 125 on indemnity)
