The short answer
A contract's insurance clause lists the lines and limits the counterparty wants your insurer to carry, so that a claim arising from your work lands there instead of on them. The common floor is general liability at $1M per occurrence and $2M aggregate, with tech E&O and cyber at $1M or more once your product touches their operations or data, and an umbrella when the ask reaches $5M. Additional insured, waiver of subrogation, and primary and non-contributory are endorsements to your policy, and each is something an underwriter prices rather than refuses. Send the clause to your broker before you sign.
Why the clause exists
Most founders meet commercial insurance for the first time inside someone else's contract. A customer agreement, a site access form, or a lease arrives with an insurance section, and suddenly a deal is waiting on coverage you may not carry yet. The clause is the counterparty protecting itself: if your work injures someone or fails expensively on their premises or their project, they want the claim to land on your insurer instead of on them.
Reading the clause well matters twice. Buying less than it requires stalls the signature; buying more than it requires wastes premium. The clause is a list of specific asks, and each one is either something you already carry or something you can add or negotiate.
The usual asks, decoded
Lines and limits come first. General liability at one million per occurrence and two million aggregate is the most common floor. Tech E&O and cyber appear once your product touches their operations or data, and workers' compensation appears whenever your people set foot on their site. When a contract demands five million in liability, the extra usually comes from an umbrella policy over your primary rather than a bigger primary.
Additional insured is the ask that confuses people most. It means your liability policy also protects the counterparty for claims arising out of your work, and it arrives in two flavors: a scheduled endorsement naming them specifically, or blanket wording that automatically extends the status to anyone your written contracts require. A policy with blanket additional-insured wording turns this ask into a certificate request; a policy without it turns the ask into an endorsement request to the carrier.
A waiver of subrogation means your insurer agrees not to chase the counterparty to recover what it paid on your claim. A primary and non-contributory requirement means your policy pays before theirs does. Notice of cancellation means they want to hear if your coverage lapses. These are standard endorsements, and an underwriter prices them instead of refusing them.
The table below shows what each kind of counterparty usually writes into the clause. The figures are typical asks, and a clause that differs from them is a reason to ask who set the number rather than a reason to worry.
Typical asks by counterparty
| Landlord | General liability at $1M per occurrence and $2M aggregate, property coverage for your contents and improvements, and the landlord named as additional insured. | The certificate is due before the lease is countersigned. |
|---|---|---|
| Enterprise customer | General liability at $1M/$2M, tech E&O at $1M to $5M, cyber at $1M or more, and sometimes a $5M umbrella. | The E&O and cyber limits scale with how much of their data and operations your product touches. |
| Hospital | Professional liability and general liability at $5M are common asks, with the hospital as additional insured and a waiver of subrogation. | Hospital vendor exhibits are written for device makers and staffing firms; a robot pilot inherits the same numbers. |
| Utility | Higher liability limits than a landlord asks, usually reached through an umbrella, plus aviation liability if you fly drones over their assets. A drone insurer notes some industrial clients want $5M for work near critical infrastructure (accessed 2026-09-12). | A general liability policy usually excludes aircraft, so the drone limit comes from a separate aviation form. |
| Federal contract | The federal acquisition rules' minimum insurance clause sets floors of $500,000 general liability per occurrence, $100,000 employer's liability, and auto liability of $200,000 per person and $500,000 per occurrence for bodily injury and $20,000 for property damage (eCFR title 48 part 28 subpart 28.3, accessed 2026-09-12). | The floors are low; a prime contractor's flow-down clause usually asks for more than the rule does. |
| State AV testing | California requires $5M, as insurance or a bond, to test autonomous vehicles on public roads (California DMV, accessed 2026-09-12). | Other states set their own figures or none; the permit application names the amount. |
What meeting the clause costs
We do not publish premium figures, because the cost of meeting a clause depends on what your program already carries. A certificate on an existing policy costs nothing; your broker issues it. Blanket additional-insured and waiver wording is often already on a well-placed general liability policy, and when it is, those asks cost nothing either.
The costs appear when the clause reaches past the policy. A scheduled additional-insured or waiver endorsement can carry a premium set by the carrier. An umbrella to reach $5M is a new policy with its own premium, priced on the primaries beneath it and on what your machine does. Raising a tech E&O limit from $1M to $5M reprices the whole line.
The cheapest response to an oversized ask is often a question. A $5M demand on a pilot with two robots and one customer can relax to $2M once someone asks who set the number.
What is negotiable and what is not
The insurance clause is part of the contract, and it negotiates like the rest of the contract. Limits are the item most often negotiated, because the requirement was frequently pasted from a template sized for bigger vendors. Requirements to carry coverage for years after the work ends, common in claims-made lines, deserve particular attention because they quietly commit you to future premiums.
Three things do not negotiate well. A hospital's professional liability limit is set by its own risk office and rarely moves for a vendor. A utility's aviation liability figure is tied to the assets under your drone. A federal floor is a regulation. For those, the work is placing the limit rather than arguing it.
Watch the wording around the numbers. A clause that asks you to name the counterparty "as their interest may appear" is asking for a loss-payee position on property coverage, which is a different endorsement from additional insured. A clause that demands thirty days' notice of cancellation is asking for something most carriers only promise to "endeavor" to give, and your broker should say so before signature rather than after a lapse.
Send the clause before you sign
The practical sequence is to send the clause to your broker before you sign. Matching the requirements against what you carry is a short task for a broker, and it turns the insurance section from a closing surprise into a checklist with prices attached.
If the contract puts a machine on someone else's site, send the site access agreement and the statement of work with it. The insurance exhibit says what limits they want; the statement of work says what your robot will be doing near their people, and the second document is what the underwriter prices.
This page describes coverage in general terms. It is not an offer of insurance, and carrier appetite, policy wording, licensing, and availability govern every quote and every claim.
Common questions
What does additional insured mean in a contract?
It means your liability policy also protects the counterparty for claims arising out of your work for them. Policies with blanket additional-insured wording extend that status automatically when a written contract requires it; without that wording, the carrier adds the party by endorsement.
What is a waiver of subrogation?
After paying your claim, an insurer normally has the right to recover from whoever caused the loss. A waiver of subrogation gives up that right against the counterparty named in your contract. It is a routine, priceable request that most carriers accommodate by endorsement.
Our first B2B customer wants $2M GL and $5M umbrella. Is that normal for a seed-stage company?
The $2M general liability ask is ordinary and usually met by the standard $1M per occurrence and $2M aggregate structure. The $5M umbrella is common in enterprise templates and negotiable on a first contract; ask who set the number and whether $2M satisfies procurement. If it does not move, an umbrella is a routine placement that sits over your general liability without rewriting it.
Can I negotiate the insurance requirements in a contract?
Usually yes. Limits, required lines, and post-contract coverage periods are negotiated like any other term, and oversized requirements often come from templates rather than actual risk assessments. It is cheaper to negotiate a limit down than to buy coverage you don't need.
What does a federal contract require us to carry?
The federal acquisition rules' minimum insurance clause sets floors of $500,000 general liability per occurrence, $100,000 employer's liability, and auto liability of $200,000 per person and $500,000 per occurrence for bodily injury plus $20,000 for property damage (eCFR title 48 part 28 subpart 28.3, accessed 2026-09-12). Contracting officers and prime contractors often ask for more, and the certificate is usually due at contract execution.
How fast can I get the certificate a contract requires?
If the program already carries what the clause asks, a certificate is an administrative document that issues quickly. If the clause requires an endorsement or a new line, carrier turnaround gets added, which is why the clause should reach your broker before signature rather than after.
Terms in this guide
Sources
- 01eCFR, title 48 part 28 subpart 28.3, insurance requirements for federal contracts, accessed 2026-09-12
- 02California DMV, autonomous vehicle testing and deployment requirements, accessed 2026-09-12
- 03A drone insurer's article on whether $1M of drone liability is enough, on industrial clients asking $5M near critical infrastructure, accessed 2026-09-12
Read next
- The certificate of insurance, explained for foundersWhat a certificate of insurance is, what each box means, what additional insured and waiver of subrogation actually change, how fast one issues, and what to watch for before you send it.
- Insurance for a pilot program at a customer siteWhat the insurance exhibit attached to a warehouse, hospital, utility or factory pilot usually asks for, what is negotiable, how long the certificate takes, and what the pilot agreement should say about the unit.