Master Contract

What Does Master Contract Mean?

A master contract is an insurance policy purchased by a trustee to cover individuals under a group plan. It is commonly obtained by employers who wish to provide insurance coverage for their employees.

Typically, the master contract is issued only to the employer, while those insured under the policy receive certificates outlining their coverage.

It is also referred to as a master service agreement (MSA).

Insuranceopedia Explains Master Contract

A master contract is issued by an insurance underwriter and provided to the company that purchases the coverage. The insurance products covered by the master contract are then made available to employees who opt into the group plan.

Master contracts outline key details about the coverage, including conditions and exclusions. Trustees and employers need to become familiar with the policy so they can design coverage that benefits all members of the organization. Group coverage under a master contract is one of several types of business insurance that employers commonly carry alongside liability and property policies.

Not everyone is eligible for coverage under the master policy. Insurance companies and employers typically set specific eligibility criteria for the plan.

The master contract model offers a convenient option for group insurance, as the overseeing entity—usually the insurance company—takes responsibility for administering the policy. Because the insurer pools all employees under a single contract, group rates are generally lower per person than individual policies, though the total cost to the employer depends on factors like workforce size and the coverage selected. Employers budgeting for this expense can get a sense of typical pricing by reviewing how much small business insurance costs.