The short answer
Customer contracts put insurance requirements in a short clause or an exhibit. Below are six sample clauses, annotated phrase by phrase: what each requires, what satisfies it, and what to negotiate. Use them to read your own contract before procurement does. StartupInsurance.ai provides a free initial written contract check within one business day after receiving the necessary information; carrier quotes and policy changes may take longer.
Use this guide to prepare questions, not to establish coverage. Any unsourced costs, limits or timing ranges are illustrative planning examples, not quotes, verified market averages or carrier commitments.
These are illustrative samples written for this page, not legal advice. Have counsel review any change to your contract.
Clause 1: General liability in an enterprise MSA
Vendor shall maintain commercial general liability insurance with limits of not less than $1,000,000 per occurrence and $2,000,000 in the aggregate, with insurers rated A- VII or better by A.M. Best.
| Phrase | What it means | What satisfies it |
|---|---|---|
| “Commercial general liability” | Standard GL, or GL inside a businessowners policy | Either, if limits match |
| “$1,000,000 per occurrence / $2,000,000 aggregate” | Standard limits | A $1M/$2M policy |
| “A- VII or better” | Carrier financial strength and size | A carrier with that rating |
See how to meet a $1M/$2M requirement with a same-day certificate.
Clause 2: Tech E&O and cyber
Vendor shall maintain technology errors and omissions and network security and privacy liability insurance, which may be combined, with limits of not less than $5,000,000 per claim and in the aggregate, including coverage for breach response and cyber extortion.
| Phrase | What it means | What to check or negotiate |
|---|---|---|
| “Which may be combined” | One shared limit is acceptable | Good for you; keep it |
| “$5,000,000” | Usually primary plus excess | Ask whether $2M to $3M will do for this deal size |
| “Including breach response and cyber extortion” | First-party cyber at the stated limit | Check ransomware sublimits |
StartupInsurance.ai checks those sublimits before you certify. See how to build a $5M Tech E&O and cyber program.
Clause 3: Endorsements
Customer and its affiliates shall be named as additional insureds on the CGL policy on a primary and noncontributory basis, and Vendor’s insurers shall waive subrogation against Customer.
| Phrase | What it means | What to check |
|---|---|---|
| “Customer and its affiliates” | Parent and subsidiaries too | Blanket forms may cover only the contracting entity |
| “Primary and noncontributory” | Your policy pays first | Usually blanket on startup GL |
| “Waive subrogation” | Insurer can’t sue the customer | Blanket on GL; may cost extra on workers’ comp |
See additional insured, waiver and primary and noncontributory, explained.
Clause 4: Claims-made maintenance
If any required policy is written on a claims-made basis, Vendor shall maintain such coverage, or purchase an extended reporting period, for at least three years after termination of this Agreement.
Keep renewing Tech E&O and cyber for three years after the contract ends, or buy a tail if you stop. Keep the retroactive date at or before the contract start.
Clause 5: AI output
Vendor shall be solely responsible for all output generated by the Services and shall indemnify Customer against any claim arising from such output, without limitation.
“Without limitation” is the problem. Insurance can back liability for negligent output, not an uncapped promise. Negotiate a cap near your Tech E&O limit; see AI contract terms and what insurance can cover.
Clause 6: Investor side letter
Prior to the Closing, the Company shall obtain directors and officers liability insurance in an amount reasonably acceptable to the Investors.
Start D&O when the term sheet is signed. “Reasonably acceptable” usually means $1M at seed or $2M to $3M at Series A, confirmed by investor counsel.
Get a contract check
Send us the insurance section of any contract. We provide an initial written review within one business day after receiving the necessary information, with questions and next steps. Carrier quotes, coverage decisions and policy changes may take longer. Get a free contract check.
A few more answers
Frequently asked questions
Where are insurance requirements in a customer contract?
Usually in a section titled "Insurance" in the master agreement, or in an exhibit. Order forms and data processing agreements sometimes add more, so read all three.
Can I change insurance requirements in a contract?
Yes, in the redline. Procurement teams change limits, endorsements and timing more often than founders expect, especially with a certificate for what you can bind now.
What does "or equivalent" mean in an insurance clause?
It means coverage with a different name or structure is acceptable if it does the same job, such as a businessowners policy in place of standalone general liability.
What does "commercially reasonable insurance" mean?
It means coverage a company like yours would normally carry, without stated limits. It's vague by design; a broker can tell you what's typical for your stage and industry.
Who should review the insurance clause, legal or a broker?
Both. Counsel handles the contract language; a broker confirms what's insurable and what it costs. Reviewing together avoids promises no policy can keep. StartupInsurance.ai works alongside your counsel.
General information, not a coverage determination or legal advice. Unless a specific source is identified, prices and timing ranges are illustrative planning examples—not measured market averages, quotes or guarantees. Policy wording, carrier, state and your company’s operations determine what applies.