Insurance Requirements Clause Explained: What Freelancers and Contractors Should Check
This page is general information, not legal advice.
An insurance requirements clause tells you which insurance policies you must carry while you work for a client, how much cover each one needs, and how you prove it. On paper it protects both sides. In practice, clients often copy the clause from contracts written for large vendors, so a solo freelancer can end up with requirements that cost more than the project pays or that their insurer can't provide. This page covers five ways these clauses often move risk onto the contractor. For each one you get an illustrative example, why it matters, and wording you can propose. What insurance a contract can require, and what a policy will actually cover, varies by jurisdiction, industry and insurer.
The example clauses below are illustrative. They are not taken from any real company's agreement.
1. Coverage types and limits that don't fit the job
A typical clause might read: "Contractor shall maintain commercial general liability, professional liability, cyber liability, workers' compensation and commercial auto insurance, each with limits of not less than [amount] per occurrence and [amount] in the aggregate."
Why it works against you
A long list of policies with high limits can be expensive or impossible for a one-person business to buy. Some may not apply to your work at all, such as auto cover when you never drive for the client, or workers' compensation when you have no employees. If you sign anyway and can't meet the requirement, you're in breach from day one.
What to ask for instead
Sample wording to propose: "Contractor shall maintain the insurance listed in Schedule [X], with the limits stated there, which the parties agree are appropriate to the Services. Contractor is not required to carry any type of coverage that does not apply to the Services or that Contractor's business does not need under applicable law."
2. Additional insured status on a primary, non-contributory basis
A typical clause might read: "Client and its affiliates shall be named as additional insureds on all Contractor policies, and such insurance shall be primary and non-contributory to any insurance maintained by Client."
Why it works against you
Naming the client as an additional insured lets them claim on your policy. "Primary and non-contributory" means your policy pays first, and the client's own insurance doesn't have to share the cost. That can use up your limits on claims that were partly the client's fault. Not every policy or insurer allows these endorsements, and some charge extra for them. This clause often works alongside an indemnification clause, so read the two together.
What to ask for instead
Sample wording to propose: "Where Contractor's insurer permits, Client will be named as an additional insured on Contractor's general liability policy, only for liability caused by Contractor's negligence in performing the Services."
3. A blanket waiver of subrogation
A typical clause might read: "Contractor waives, and shall cause its insurers to waive, all rights of subrogation against Client for any loss, whether or not caused by Client."
Why it works against you
Normally, after your insurer pays a claim it can try to get the money back from whoever caused the loss. A waiver of subrogation gives up that right. If the client is the one at fault, your insurer may still pay, your premiums may go up, and nobody recovers from the client. Some policies need a specific endorsement before you can agree to this. Without one, signing could put your own coverage at risk.
What to ask for instead
Sample wording to propose: "Each party waives subrogation against the other only to the extent its insurer permits and only for losses covered by that party's insurance. This waiver is mutual."
4. Proof of insurance as a condition of payment
A typical clause might read: "Client may withhold any payment until Contractor provides certificates of insurance satisfactory to Client, and shall have no obligation to pay for Services performed before such certificates are received."
Why it works against you
"Satisfactory to Client" lets the client decide when your paperwork is good enough. Read literally, the clause could let them avoid paying for work you've already done because a certificate arrived late or had a formatting problem. That turns an admin task into a payment risk. See contractor payment terms red flags.
What to ask for instead
Sample wording to propose: "Contractor will provide a certificate of insurance within [number] days of Client's written request. Late delivery does not affect Client's obligation to pay for Services already performed."
5. Duties that run beyond the project, or the right to buy cover and bill you
A typical clause might read: "Contractor shall maintain all required insurance for [number] years after completion of the Services. If Contractor fails to do so, Client may purchase such insurance and deduct the cost from any amounts owed to Contractor."
Why it works against you
Keeping professional liability cover for years after a short project can cost more than the project paid. Letting the client buy a policy for you and deduct the premium means they choose the insurer and the price, and then take it from your invoice. Combined with a short-notice exit right, you could lose both the work and the fee. See termination for convenience clauses explained.
What to ask for instead
Sample wording to propose: "Contractor will maintain the required insurance during the term of this Agreement. If coverage lapses, Contractor will have [number] days after written notice to restore it before Client may exercise any remedy."
Also worth a look
Check how insurance interacts with the limitation of liability clause. A sensible liability cap tied to your coverage limits protects you, while uncapped liability can go beyond any policy you carry. If you use helpers, read the subcontracting clause to see whether they must carry the same cover. For a wider checklist, see freelance contract red flags and independent contractor agreement red flags.
Scan your own contract free
Insurance clauses are often buried in long schedules, and one phrase like "primary and non-contributory" can change who pays a claim. Upload your contract to the ScanMyTerms freelance contract review as a PDF, DOCX, TXT or MD file, or just photograph it. In about a minute you get the clauses that work against you, each with a risk level, the exact wording, why it hurts and how to change it. The free preview needs no sign-up and shows the risk count and the first two findings. The full report is $5. ScanMyTerms doesn't use your documents to train AI models, and reports are deleted after 7 days.
This page is general information, not legal advice. Insurance and contract rules vary by jurisdiction, so before you agree to specific insurance terms, talk to a qualified lawyer and a licensed insurance broker where you work.
Sources
- All clause examples on this page are illustrative and written for this guide. They are not quoted from any real company's agreement.
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