Cross liability clause
A clause in a policy covering several insureds that lets one claim against another as if it were a third party, each being treated as holding a separate policy, within a single overall limit.
A liability policy covering several insureds, for example all participants in a construction project under a single policy, runs into a difficulty: a claim by one insured against another is not, in principle, a third-party claim, and policies often exclude damage caused between insureds. The cross liability clause removes that obstacle by providing that the policy applies to each insured as if a separate policy had been issued in its name. A project owner injured through a contractor's fault, or a contractor whose work is damaged by another, can thus be indemnified under the liability of the party at fault, as an outside third party would be. The clause does not multiply the limit: all insureds' claims are charged to a single overall limit, which the underwriter must size accordingly. It is standard in contractors' all risks and project policies, and it differs from waivers of recourse, which instead eliminate claims between parties rather than having them covered.
Textbook case: on a site insured under a single all risks policy, one contractor's crane damages the frame installed by another. Thanks to the clause, the second is indemnified under the first's liability, as a third party would be, within the 20 million euro limit shared by all participants on the site.
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