Often more than one entity or individual will be insured under the same liability policy. In the event that one of the named insureds makes a claim against another insured covered by the same policy, the cross liability endorsement treats the situation as if each insured had a separate policy. It is important to note, however, that this endorsement does not increase the insurance company’s overall limit of liability.For example, a firm may have Directors and Officers Liability coverage in the amount of $10,000,000. Several of the outside directors may sue the firm’s CEO. Both the directors and the CEO are covered under the same policy. The cross-liability endorsement treats each insured as if he or she had a separate policy but the insurance company’s total exposure remains at $10,000,000.
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(a) When two or more insured are covered under the same liability Insurance Policy, the liability of one insured for harming other(s). The cross liability clause in such a Policy obligates an Insurer to protect each insured separately. (b) Where two vessels, A and B, are in collision in circumstances where both were partly to blame, so that A is liable to B for part of B’s damage and B is liable to A for part of A’s damage, the Admiralty Court makes a single award to the party who has a net balance in his favour. Marine Hull policies provide that claims shall be settled under the policy on the basis of cross-liabilities, viz., as if each party had been compelled to pay his proportion of the other’s damage.