Reviewing an insurance requirements clause

An insurance requirements clause sets out the policies a party must hold for the term of the contract, the limits of each, and the evidence it must produce. It is a short clause with a direct cost, since cover above the levels a business already holds has to be bought, and a direct consequence, since a cap on liability that is higher than the insurance behind it is a promise the business cannot keep. Some insurances are required by law whatever the contract says. I review the clause from whichever side instructs me and return it marked up with a written explanation of what the cover required would cost, whether it matches the liability position, and the changes the other side will accept, for a fixed fee of £495 in three working days.

Who this is for

Suppliers, contractors, consultants and service providers in England and Wales asked to carry insurance at levels a customer specifies, and customers wanting to know what cover their supplier should hold, in services, construction, consultancy, technology, events and outsourcing contracts. Both parties are businesses.

What to look for in an insurance requirements clause

The policies required and the ones the law requires anyway

The clause will list public liability, employer's liability, professional indemnity, product liability and, increasingly, cyber cover, each with a minimum limit. An employer must hold employer's liability insurance under the Employers' Liability (Compulsory Insurance) Act 1969, and a business that uses vehicles must insure them under section 143 of the Road Traffic Act 1988; the rest are contractual. The review checks the list against the risks of the contract, since professional indemnity is relevant to advice and design and product liability to goods, and removes cover the contract does not need.

The limits, and whether the supplier holds them

The limits should reflect the losses the contract could cause rather than a round figure from the customer's template, and the review checks each limit against the supplier's policies, the cost of increasing them, and the basis on which the limit applies: per claim, in aggregate for the year, or in aggregate for the contract. It asks for limits the supplier holds or can obtain at a stated cost, for the basis to be stated, and for professional indemnity, which is written on a claims-made basis, to be maintained for a period after the contract ends rather than only during it.

Insurance and the liability cap

The cap on liability and the insurance should match, since a cap above the cover leaves the business exposed and a cap below it leaves the customer under-protected. The review reads the two clauses together, checks whether the cap is set by reference to the insurance, and checks that the contract's indemnities and warranties are within what the policies cover, since policies exclude liability assumed by contract beyond what the law would impose and a fitness for purpose warranty may be uninsured. It also checks the obligations the contract creates that a policy would treat as a breach of condition, such as an admission of liability.

Noting the other party's interest, joint names and subrogation

Customers ask for their interest to be noted on the supplier's policy, for joint names cover, or for a waiver of subrogation so that the insurer cannot pursue the customer after paying a claim. The review explains what each involves, since noting an interest gives the customer little, joint names cover gives it a direct claim, and a waiver of subrogation is a change to the policy the insurer must agree. Under the Third Parties (Rights against Insurers) Act 2010 a claimant can claim directly against an insolvent supplier's insurer, which is a reason for a customer to require cover and a reason for a supplier to keep it in force.

Evidence of cover, lapse and the duty of fair presentation

The clause will require the supplier to produce certificates or broker's letters on request and to notify the customer if cover is cancelled or reduced, and the review checks that the evidence required is what brokers provide, that the customer cannot demand copies of the policy wording with the premium and other confidential details, and that a lapse of cover is a breach with a period to reinstate rather than an immediate termination event. It notes that the supplier's own obligations to its insurer, including the duty of fair presentation under the Insurance Act 2015, apply to the disclosure of the contract's risks when the policy is placed or renewed.

Sub-contractors, the customer's own cover and the cost

The review checks whether the supplier must ensure its sub-contractors carry the same cover, which the supplier can require but not guarantee, whether the customer holds cover for its own property and people on the supplier's site, and the treatment of the premium in the contract price. Where the customer terminates for a failure to maintain cover, payment for work done should follow with interest under the Late Payment of Commercial Debts (Interest) Act 1998, and the customer's own obligations to insure, for example the works under a construction contract or the equipment under a hire, should be stated with the same precision as the supplier's.

What it costs

Standard review, £495. Marked-up document and a written explanation of the changes. Three working days.

Buying online forms the engagement on payment. The scope is what the contract review page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• Your own contract returned with my amendments as tracked changes, plus a clean version with every change accepted, ready to send to the other side
• Comments in the document where a point needs explaining
• A written explanation of what I have changed and why, by email or as an attachment if it is lengthy, marking the points I would hold firm on and the ones that are negotiable
• A view on what is normal market practice and what is the other side pushing their luck
• One round of follow-up questions by email, included

What is not included

• Negotiating directly with the other side, which I quote separately once I know who is on the other side. Where the other side is willing to share a live document, I can work in that document directly
• Drafting a replacement contract from scratch
• Advice on the law of any jurisdiction other than England and Wales
• Tax, accounting or regulatory advice
• Disputes about a contract that is already signed

Questions I am often asked

The customer wants professional indemnity cover far above what we hold. Do we have to buy it?

Only if you agree to, and the review checks whether the risk of the contract justifies it, what the additional cover would cost and whether it is available. It asks for the limit to match the liability cap and the contract's risk, and for cover on an aggregate basis where per-claim cover is not obtainable.

Our liability cap is higher than our insurance. Does that matter?

It does: the difference is the business's own money, and policies exclude liability assumed by contract beyond what the law would impose. The review aligns the cap with the cover or identifies the exposure so that you can decide whether to buy more cover or reduce the cap.

The customer wants a waiver of subrogation. What is that?

An agreement by your insurer not to pursue the customer for a loss it has paid you for. It is a change to the policy that the insurer must agree, and it can be refused or charged for. The review explains what the customer is asking and what the alternatives, joint names cover or an indemnity, would involve.

Related guidance and services

• Contract review, £495, the service this page describes
• Terms and conditions drafting, £995
• Reviewing a limitation of liability clause
• Reviewing an indemnity clause

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: September 2026. Email geoffrey@caesar.co.uk.