Glossary

Insured contract

A contract in which you assume another's tort liability, which the CGL covers despite its contractual liability exclusion if it fits a listed type.

Also called: insured contract definition, contractual liability coverage, CGL insured contract

"Insured contract" is a defined term in the ISO commercial general liability form (CG 00 01), and it is the exception that gives contractual liability coverage its meaning. The CGL excludes bodily injury or property damage for which you assume liability in a contract, but that exclusion does not apply to liability assumed in an insured contract, so long as the injury or damage happens after the contract is signed.

The definition lists specific agreements: a lease of premises, a sidetrack agreement, an easement or license agreement, an obligation required by ordinance to indemnify a municipality, and an elevator maintenance agreement, each with its own limits. The widest category is the part of any other contract pertaining to your business under which you assume the tort liability of another to pay for bodily injury or property damage to a third party. Tort liability means liability that the law would impose without a contract. That is why a hold harmless clause in a subcontract is usually an insured contract, while a promise to pay for a pure contract breach is not.

Coverage reaches only tort liability, not fines or pure contract damages, and an indemnity for an architect's or engineer's professional services is excluded. Read your contract against the definition. The guide on contractual liability coverage and insured contracts covers the form, and hold harmless agreement explains the clause it responds to.

Last reviewed October 10, 2026

In the index now

Related terms

Contractual liability Responsibility you take on by agreeing in a contract to cover another party's losses, and the limited way a general liability policy responds to it. Hold harmless agreement A contract clause in which one party agrees to take on another party's liability for specified claims, usually those arising from the first party's work. Additional insured A person or business added by endorsement to someone else's liability policy so it can claim directly for suits tied to the policyholder's work or premises. Indemnity The principle that insurance restores your financial position after a loss, no better and no worse; also a contract promise to make good another's loss. Primary and noncontributory Wording that makes your liability policy respond first to a party you named as an additional insured, without drawing on that party's own insurance.

Related guides

AIA A201-2017 insurance requirements, provision by provision What AIA A201-2017 Article 11 and the A101 Exhibit A require of owner and contractor: liability, builder's risk, waivers, bonds and what to negotiate. Inside the CGL policy: Coverages A, B and C How the ISO commercial general liability form's three coverages work: the triggers, the key exclusions, supplementary payments and which limit each claim uses. CGL exclusions: what a general liability policy does not cover The ISO CGL lists 17 Coverage A exclusions plus a Coverage B list, and endorsements add more. What each removes and where the gap gets filled. Insurance requirements in commercial leases What a commercial lease typically makes a tenant buy, from liability limits and additional insured status to waivers, and how to negotiate them before signing. How to review the insurance requirements in a contract A step-by-step method for reading the insurance clause in a lease, vendor or construction contract, matching it to your policies and fixing gaps before signing. Contractual liability coverage and insured contracts How the CGL contractual liability exclusion and insured contract exception work, what CG 24 26 changes, and how anti-indemnity laws limit hold-harmless clauses.

Related industries

Architect and engineer insurance What design firms need: practice and project professional liability, contract clauses that void cover, GL, cyber, pollution and a BOP for the office.