Clause library
Insurance clause, explained
An insurance clause names the policies each side must hold, the limits, and whether cover must be evidenced — statutory employers’ liability where it applies, and contractual PI and PL on a services job.
Last updated 28 October 2026
What does an insurance clause do?
An insurance clause names the policies each side must hold, the limits, and whether cover must be evidenced. Most employers in Great Britain must carry employers’ liability of at least £5 million (ELCI Act 1969 s.1; 1998 Regulations reg.3). Professional indemnityAn indemnity is a promise to cover another party's losses arising from a particular event or claim.More in the glossary and public liability are contractual for a freelancer with no employees. We write the policies and the limits.
Which policies do services contracts usually name?
Public liability, professional indemnity, and employers’ liability where there are employees. PI is the policy that answers a claim about the work itself; PL answers injury or property damage. Limits should match the liability cap, not dwarf a small fee. A client that demands £10 million PI on a £2,000 job is buying comfort it has not paid for. Name each policy, the limit, and whether it must be maintained for a run-off period after the job.
Is employers’ liability compulsory for a sole trader?
ELCI 1969 s.1 bites on an employer carrying on business in Great Britain, for injury or disease sustained by employees in the course of employment. A genuine sole trader with no employees is not required to hold EL cover by that Act. Taking on a casual helper can change that. Do not paste an EL obligation onto a one-person studio that has no employees. If the supplier has staff, write EL at the statutory minimum of £5 million (1998 Regulations reg.3) or higher.
Should the client be named as an interested party?
Sometimes, on a shoot or a build on the client’s premises. Being noted as an interested party is not the same as being an additional insured, and it is not a substitute for the indemnity. Insurers often refuse wide additional-insured wording on a small PI policy. Ask for evidence of cover — a broker letter or a certificate — rather than a rewrite of the policy. Put the evidence on the shared draft before work starts.
What happens if cover lapses mid-job?
Write a duty to maintain the named policies, to notify a lapse, and a right to pause work if cover is not reinstated. Insurance is not a cap, and a cap is not insurance. Pair the clause with limitation of liability so a PI limit and a contract cap are not two silent, competing numbers. Subcontractors should carry their own cover; the head supplier’s policy may not respond to a specialist’s negligence.
Example wording
Example · our own drafting
The Supplier will maintain, while this agreement lasts and for [12] months after, professional indemnity insurance of not less than £[1,000,000] and public liability insurance of not less than £[1,000,000]. If the Supplier has employees in Great Britain, it will also maintain employers’ liability insurance of not less than £5 million. On request the Supplier will give the Client reasonable evidence of cover. A lapse of a required policy is notified promptly; the Client may pause the Services until cover is reinstated.
In Plain English
While this job lasts, and for a year after, the supplier keeps professional indemnity and public liability cover of at least £1 million each. If it has employees in Great Britain, it also keeps employers’ liability of at least £5 million. If the client asks, the supplier shows reasonable proof. If a required policy lapses, the supplier says so quickly, and the client can pause the work until cover is back.
What should you watch for?
| Point | Watch for | Push for |
|---|---|---|
| Limits | £10 million PI on a small creative fee, or silence on any cover. | Named policies at limits that match the fee and the liability cap. |
| EL | Compulsory employers’ liability pasted onto a sole trader with no employees. | EL only where there are employees, at the statutory £5 million minimum. |
| Evidence | A demand to rewrite the policy as additional insured for a £500 job. | A broker letter or certificate on request, before work starts. |
| Lapse | No duty to tell the client if cover falls away mid-job. | Prompt notice, and a right to pause until cover is reinstated. |
| Cap | Insurance treated as a substitute for the liability cap. | Insurance and the cap as two sentences, with matching numbers where it matters. |
Which contracts include it?
Lex includes this clause in, among others:
- Services agreement (master services agreementA master services agreement (MSA) sets the legal terms for an ongoing relationship, with each project then agreed in a separate statement of work.More in the glossary)
- Independent contractor agreement
- Videography contract
What does the law say?
Every employer carrying on any business in Great Britain must insure, and maintain insurance, against liability for bodily injury or disease sustained by employees arising out of and in the course of their employment in Great Britain. The Employers’ Liability (Compulsory Insurance) Regulations 1998 set the minimum cover at £5 million for any one occurrence.
Source: Employers’ Liability (Compulsory Insurance) Act 1969; 1998 Regulations, s.1; reg.3Checked 3 November 2026Pending lawyer review
Draft a master services agreement with this clause
Free for the other sideLex drafts it in Plain English beside the legal wording. Share one link; both sides agree and sign.
Frequently asked questions
What does an insurance clause mean?
It names the policies each side must hold, the limits, and whether cover must be evidenced. Employers’ liability is statutory for most employers in Great Britain. Professional indemnity and public liability on a freelance job are contractual.
Which policies do services contracts usually name?
Public liability, professional indemnity, and employers’ liability where there are employees. Limits should match the job and the liability capA liability cap is the maximum amount one party can be asked to pay the other under a contract.More in the glossary. Name each policy, the limit, and any run-off period after the job.
Is employers’ liability compulsory for a sole trader?
ELCI 1969 s.1 applies to an employer with employees in Great Britain. A genuine sole trader with no employees is not required by that Act to hold EL cover. The 1998 Regulations set the minimum, where the duty applies, at £5 million for any one occurrence.
Should the client be named on the supplier’s policy?
Sometimes, on a shoot or a build on the client’s premises. A note of interest is not an additional insured, and it is not a substitute for an indemnity. Ask for evidence of cover rather than a rewrite of a small PI policy.
What if cover lapses mid-job?
Write a duty to maintain the named policies, to notify a lapse, and a right to pause work until cover is reinstated. Insurance is not a liability cap; put both numbers on the same page.
Sources
- Employers’ Liability (Compulsory Insurance) Act 1969; 1998 Regulations, s.1; reg.3Checked 3 November 2026Pending lawyer review
Related
The legal wording governsLast reviewed 28 October 2026Pending lawyer review