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Cross liabilities

1. When two blameworthy vessels collide, liability will be apportioned between them according to their degree of fault and, following the running down clause, there will be two payments, i.e. cross liability. Admiralty law prescribes a single liability settlement, a method favourable to the receiving shipowner. 2. Where two or more jointly insured parties, (marine or non-marine) have legal rights against each other, the liability cover will respond as though a separate policy had been issued to each named insured. This is made possible by a cross liabilities or severability of interest clause.

Cross Liability

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.

Cross liability coverage

In the event of a claim by one insured for which another insured covered by the same policy may be held liable, this endorsement covers the insured against whom the claim is made in the same manner as if separate policies had been issued. However, it does not operate to increase the insurance company’s overall limit of liability.

Cross purchase

Arrangement of buy-sell arrangements made by business owners while living, which in the event of an owner’s death, binds the shareholders or partners to purchase the deceased’s interests in the business.
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A form of business insurance in which each party to a mutual agreement (usually to buy out a disabled or deceased co-owner) insures each of the other parties.

Cross purchase agreement

Buy-sell contract that is often funded with life insurance policies owned by each business principal on the lives of all other business principals.
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A binding buy-sell agreement usually used with a partnership in which each partner agrees to purchase the business interest of a deceased or disabled partner.

Cross-assignment

A method used in partnership insurance whereby each partner takes out a policy on his own life for the amount required, pays the premium himself and assigns the policy to his partners in order to put the money into their hands on his death or retirement. Any gain under the policy is subject to capital gains tax.