Wednesday, 15 July 2015

Cross Liability Coverage in an Insurance cover

Cross liability refers to the ability of one insured party to sue another insured party if both parties are under the same contract. Cross liability coverage is most frequently found in commercial insurance contracts.

 It allows the different parties on the contract to be treated separately in certain situations, while in other situations treated the same. In the case that the parties are treated separately during a claims suit, they are not all given a separate coverage limit. This means that an aggregate limit still applies to the total coverage provided by the policy.

 For example, an automobile company shares a liability policy with its subsidiaries. The parent company is responsible for assembling the vehicle, while the subsidiaries make the parts and components. Because of a faulty part, a number of road accidents occur, resulting in a number of claims made against the automobile manufacturer. Using the separation of insureds feature of the cross liability coverage policy, the parent company sues one of its subsidiaries."


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