Key points
- Your contracts often decide your auto limits and endorsements more than any rating factor.
- Endorsement wording must match what the contract actually requires.
- Review the insurance section before you sign, not when the certificate is due.
Most established contractors and service companies sign agreements with insurance requirements attached — from general contractors, property owners, facility managers, municipalities, and industrial clients. Those requirements frequently include commercial auto.
Common auto requirements
Liability limits. Many contracts require $1,000,000 combined single limit for auto liability, and some require more through an umbrella or excess policy. Larger commercial, industrial, and public-entity work often requires higher limits.
Additional insured status. The customer asks to be added as an additional insured on your auto policy. Availability and wording vary by insurance company.
Waiver of subrogation. You agree that your insurance company will not seek recovery from the customer after paying a claim. This usually requires an endorsement.
Primary and non-contributory. Your policy responds first, without seeking contribution from the customer’s own insurance.
Notice of cancellation. Some contracts require advance notice to the customer if your policy is cancelled. Insurance companies have their own rules about providing this.
Covered autos. Some contracts specify “any auto” or require coverage for owned, hired, and non-owned autos.
Where it goes wrong
- The contract requires a specific endorsement, and the policy doesn’t include it — discovered only when a certificate is requested.
- Higher limits are required, but the umbrella doesn’t schedule the auto policy or the limits don’t combine as the contract expects.
- An insurance change at renewal quietly drops an endorsement the old policy had.
What to do
- Send the insurance section to your agent before you sign. It’s much easier to negotiate or price a requirement before the contract is executed.
- Keep a list of your active contracts and their requirements. Review it at each renewal.
- When comparing proposals, check the endorsements, not just the premium. A lower premium that drops a required endorsement isn’t comparable.
Contract interpretation is ultimately a legal question. We can explain how insurance responds and what endorsements are available; your attorney should advise on contract terms.