What Is Cross-Liability Coverage?

Cross-liability coverage is a clause in a commercial insurance contract. When an insurance contract covers multiple parties, cross-liabi🐈lity provides coverage for both parties if one makes a claim against the other.

Cross-liability c🐬o🥂verage treats the different parties—covered under the same contract—as if they have their own separate policies.

Understanding Cross-Liability Coverage

When two covered parties secure cross-liability coverage, one insured party can sue another insured party even when both parties are under the same policy. Standard liability insurance typically includes a cross-liability clause known as a "Separation of Insureds" agreement.

An insurance contract that includes cross-liability coverage will typically have phrasing similar to this: “Every insured claimed against under this policy will be treated, at the time of🧸 the claim, as if they were the only insured under the policy.”

Commercial insurance 🐷contracts typically have cross-liability coverage. The claus𓄧e allows the different parties included in the contract to be treated separately in certain situations (while in other situations, they are treated the same).

In a case where the parties are treated separately during a claims suit, they are not all given a separate coverage limit. This difference means that an aggregate limit still applies to the total coverage provided by the policy. Business 澳洲幸运5官方开奖结果体彩网:liability insurance policies may exclude coverage for intercompany lawsuits, thus eliminating 😼the "⛄Separation of Insureds" feature in some cases.

For example, the founding partners of a law firm may sue each other for damages or injuries that each party insists that the other caused. Companies that wa🦩nt to insure against this type of ꧋risk will have to purchase an intercompany product suit exclusion.

Many 澳洲幸运5官方开奖结果体彩网:commercial general liability insurance policies already have language addressing cross-liability coverage and ♊do not have exclusions for this type of event. Since no exclusion is involved, a separate endorsement is unnecessary. However, some liability policies c🧔ontain insured-versus-insured exclusions that effectively eliminate cross-liability coverage.

Example of Cross-Liability Coverage

Suppose there is an automobile company that shares a liability policy with its subsidiaries, whi🦹ch manufacture various parts. The parent company is responsible for assembling the vehicle, while the subsidiaries make the components. Because of a faulty part in one of the cars that the automobile company manufactures, a number of road accidents occur. This results in claims made against the automobile manufacturer. Under the Separation of Insureds feature of the c♔ross-liability coverage policy, the parent company sues one of its subsidiaries.

The cross-liability endorsement is one reason 澳洲幸运5官方开奖结果体彩网:general liability insurance is so important to protect the financial assets of any busi🅺ness.