Anyone who is buying an insurance policy today needs to understand what is cross liability coverage. Well, the name gives away a bit about its meaning. Cross liability refers to the liability of different parties in an insurance contract towards each other in an event were one has to pay the other depending upon the condition of the contract.
Let’s understand this
There is an automobile company where there is a parent company that assembles the parts while its subsidiary produces the parts. If due to a faulty part, many road accidents occur, so the company needs to pay the compensation. If both parent and its subsidiary are covered under cross liability coverage, then the parent company can sue its subsidiary for the compensation. Thus, we can safely say that this coverage covers mostly commercial insurance contracts.
Features
Under this coverage, all the insured parties might be treated differently under certain specific conditions, while they might be treated similarly under other conditions. The parties to a contract are treated differently under claims; however they are not given separate cover i.e. the total coverage limit will be applied to all. The main thing to be understood here is that cross liability coverage doesn’t increases the coverage limit.
Commercial insurance contracts have always been a mystery to me. But in case of opening a business where my employees travel by car - either their own or a business car - it is useful to know that cross liability coverage will protect me, my employees and their vehicles with no decrease to coverage limit.
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