Incidental Contract

What Does Incidental Contract Mean?

An incidental contract is a component of coverage offered by a general liability insurance policy, listed under indemnity provisions. It covers liabilities for individuals or groups hired by the insured to work on a project under the insured’s name. Most businesses get this protection through a standard general liability insurance policy, though the exact terms of the incidental contract clause can differ from one insurer to the next.

Insuranceopedia Explains Incidental Contract

An incidental contract would apply, for instance, if a repair and remodeling company is hired to update the interior of a building and brings on an electrician as a contractor to modify the electrical system. If the electrician makes an error resulting in faulty wiring, the incidental contract in the repair company’s general liability policy would cover the legal costs associated with the contractor’s mistake. The electrician in this scenario would still want their own electrician business insurance policy, since incidental contract coverage protects the hiring company rather than the subcontractor.