Wordings Library
Construction & liability
Clause explained
Principal's Indemnity
Extends protection to a project principal for liability arising from the insured contractor's work.
Meaning
Extends protection to a project principal for liability arising from the insured contractor's work.
Why insurers use it
To satisfy contract requirements while tying the principal's protection to the insured operations.
Effect on coverage
Usually does not create unrestricted cover for the principal's own unrelated acts or wider liabilities.
Illustrative example
A project owner is sued after a visitor is injured in an area controlled by the contractor.
Claim consequence
Cover may fail if the claim arises outside the insured work or the principal was not correctly identified.
What the insured should negotiate or check
Check the principal's exact legal name, contract, work scope, vicarious liability, own negligence, and limits.