The liability assumed under contract. This insurance protects the insured in the event a loss occurs for which he has assumed liability, express or implied, under a written contract. For example, under most construction agreements with a municipality, the contractor agrees to “hold the municipality harmless” for any accidents arising out of the job. Contractual Liability Insurance would thus protect the contractor from any loss for which the municipality would be liable in connection with the construction.

In accident Insurance, proposal forms are always used. These forms are designed to obtain all material information about the subject matter of Insurance. The form contains a declaration. The proposer has to declare that he has answered all the questions truly and correctly, and that he agrees that the proposal and declaration shall be the basis of the contract between him and the Insurers. The legal effect of this declaration is that the Insurers can avoid the contract if any answer is inaccurate or incorrect even if the answer is not material to the risk. This means that the answers are required to be fully and absolutely true and correct. This is called the contractual duty of utmost good faith which is far more strict then the common law duty.

“Contractual liability is covered under the Commercial General Liability Policy (CGL) subject to some limitations. The coverage is necessary because many business firms enter into contracts with others where they agree to assume the tort liability of someone else. A common such agreement is a “”hold harmless agreement”” between a tenant and a landlord. Here the tenant agrees to hold the landlord harmless for any acts of the tenant, the tenant’s visitor, employees, or independent contractors.For example, a tenant hires a plumber to install new bathroom fixtures in his office restroom. Several days later, a pipe ruptures and floods the office below. The tenant in the lower office sues the landlord for negligence in maintenance of the building’s plumbing. Further investigation leads to the fact that it was the negligence of the plumber in installing the new fixtures. The hold harmless agreement states that the tenant will reimburse the landlord for any acts of the tenant’s independent contractors. While the plumber may ultimately be the one who pays the damages, the landlord is not concerned with this problem. The tenant pays the damages to the office below him and the landlord is not involved. Thus, the landlord has transferred the risk of having tenants in his building to each of his tenants by .means of a hold harmless

The Commercial General Liability excludes the assumption of liability in a contract with two exceptions:

Liability is provided by the insured if the liability would be imposed without any contract or agreement, and,

Liability that is assumed under an “”insured contract.””

Insured contracts include, but are not limited to:

Lease of premises (but not for a promise to pay fire damage to a premises you rent or occupy)

Sidetrack agreement Easement or license agreement (not for construction or demolition on or within 50 feet of a railroad) Indemnify a municipality (except for work for the municipality)

H Elevator maintenance agreement

Broad form contractual coverage may be added to the Commercial General Liability policy that covers the insured for any tort liability the insured assumes for someone else.”
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Legal liability assumed under contract. See Also: “Liability, contractual liability.”
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UK: Liability that arises as a result of a contract, as opposed to liability, imposed by common law or statute. Liability policies exclude liability for liquidated damages as, unlike unliquidated damages, they are agreed under contract.
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Liability that does not arise by way of negligence but by assumption under contract. For example, in certain leases, a tenant may assume a landlord’s liability to others for unsafe conditions on the premises. Some such assumptions are covered automatically under the Commercial General Liability form.

Insurance against loss under a contractual liability agreement.

Insurance that covers liability of the insured assumed in a contract. Under the standard commercial general liability (CGL) policy, such coverage is limited to liability assumed in any of a number of specifically defined insured contracts or to liability that the insured would have even in the absence of the contract.

Insurance that covers the insured against liabilities they are responsible for as stated in a written contract.

Saving where the decision to save was made previously and binds current saving decisions.