Cross Liability Endorsement
An endorsement ensuring that the insurance policy applies separately to each insured, allowing one insured to bring a claim against another insured under the same policy.
What It Is
A Cross Liability Endorsement, also known as a separation of insureds endorsement, ensures that the insurance policy treats each named insured as if they had their own separate policy. This means one insured can bring a claim against another insured under the same policy, and the policy will respond as if only the claiming insured were covered.
Without cross liability provisions, a single policy covering multiple insureds might treat them as a single insured, preventing one from making a claim against another. This is particularly important for joint ventures, partnerships, and construction projects where multiple entities are insured under one policy.
Most standard CGL policies include a separation of insureds condition (Section IV), but this condition has limitations. The cross liability endorsement strengthens this provision and ensures it applies to all coverage parts.
Why It Matters for Brokers
Brokers managing accounts with multiple named insureds — such as parent/subsidiary structures, joint ventures, or wrap-up programs — must ensure cross liability provisions are in place. Without them, one entity cannot make a claim against another entity under the shared policy. This is especially important in construction where a subcontractor insured under an OCIP or CCIP may need to bring a claim against the general contractor, who is also insured under the same program.
Real-World Example
Two companies form a joint venture (JV) and purchase a single CGL policy naming both as named insureds. During the project, Company A's negligence causes property damage to Company B. With the cross liability endorsement, Company B can file a claim against Company A under the shared policy, and the policy responds as if Company A had its own separate policy. Without cross liability, the claim might be denied because both companies are insureds under the same policy.
Common Mistakes
- 1Assuming the standard CGL separation of insureds provision provides the same protection as a formal cross liability endorsement.
- 2Not requesting cross liability for joint venture policies, OCIP/CCIP programs, or policies with multiple named insured entities.
- 3Forgetting that cross liability provisions do not increase the policy's aggregate limit — each insured's claims still erode the shared aggregate.
How brokerageaudit.com Handles This
Policy Checker identifies policies with multiple named insureds and verifies that cross liability provisions are in place, flagging situations where the separation of insureds condition may be insufficient.