Assumed Liability

This is sometimes referred to as contractual liability. This liability occurs when a person has accepted responsibility by entering into an implied or an expressed contract. Often the company or person contracted will ask to be named as additonal insured on your policy.

An example of assumed liability is when the contract for snow removal states that you have the obligation to determine when the snow needs to be removed. If there is an accident or injury due to snow not being removed promptly then your insurance will be called upon to pay the claim.

This is different then contractual compliance. Contractual compliance s doing what the contract says you will do such as make payments at a certain time or deliver product to a certain place at a certain date. Be careful in how you set up the contract to be sure the net outcome is beneficial for the business. Watch carefully for high-risk terms or requirements that are beyond your ability to achieve or you will find yourself non-compliant.

Consider providing your agent or broker with a copy of your lease or contract. If this document is sent to the insurer for review then you have fully declared the conditions under which you will be operating. Be sure to notify your agent or broker of any change in operations or revisions to the contract.