Winning a new client contract feels like progress, with new revenue, new opportunities and maybe even a step into a new market. But buried in the legal schedules and insurance clauses of that shiny new agreement could be obligations that quietly create major problems with your existing insurance programme.
And often, agencies don’t realise it until a claim lands.
It’s easy to assume your insurance will simply respond if something goes wrong. But insurance policies are arranged around the risks you’ve disclosed and the terms your insurer has agreed to cover. Sign a contract that changes those assumptions, and you may be creating exposures your policy was never designed for.
Here’s what you need to know…
Taking on work in new territories, particularly the US or Canada, is one of the most common examples here.
Many UK policies either exclude these territories altogether or treat them very differently – and here lies the potential problem. Many UK agencies sign contracts governed by US law, or with North American clients, without spotting that the insurance implications could be significant.
Alongside territorial issues, those contracts often introduce insurance requirements that aren’t automatically covered. Things like waivers of subrogation, cross liability provisions, additional insured naming requirements or primary and non-contributory wording can all require insurer agreement, endorsements or even different policies.
Agreeing to provide something in a contract doesn’t mean your insurer has agreed to provide it.
A contract might require £5m, £10m or even higher levels of Professional Indemnity or Cyber cover, when your programme currently carries less. Or it may require covers you don’t currently buy at all. That might mean increasing limits, purchasing extensions or adding entirely new policies, and those changes can be expensive.
Sometimes, the additional premium and compliance costs materially reduce the profitability of the contract itself. This is something that should be understood before the work is signed, not after. Because a profitable project can look much less attractive once the insurance spend catches up.
Many agencies focus on service levels and payment terms but pay less attention to liability caps. Agreeing to caps far in excess of your fees, or worse, uncapped liabilities, can create exposures far beyond what insurers would expect. A common best practice is trying to tie liability to fees earned, or a sensible multiple of those fees. But some contracts push much further.
Consequential loss clauses can also be particularly problematic. If a contract makes you responsible for indirect or consequential losses, such as loss of profits, revenue or business interruption suffered by the client then you may be assuming liabilities your policy may not fully contemplate or that insurers may be uncomfortable with altogether.
Similarly, hold harmless and indemnity clauses can cause major issues. These clauses can transfer liability to you that wouldn’t ordinarily sit with you at law. In effect, you may be voluntarily taking on someone else’s risk. Insurers tend to take a dim view of that.
If you’ve expanded your liability by contract beyond what would exist under common law, cover may not always respond as you expect.
Don’t be fooled into thinking this is a problem that spawns at claim level. The issue often begins the moment the contract is signed. Because at that point, you may have promised things your insurance doesn’t support. That disconnect is where problems live, but it is avoidable.
Legal review is critical, of course. But unfamiliar or complex contracts shouldn’t just go to your lawyers. They should go to your insurance specialist too.
An insurance broker with strong sector expertise can review insurance clauses, flag obligations that fall outside your current arrangements, help you understand what it would cost to comply and identify wording that could create problems with insurers before you commit.
That conversation can save a lot of pain later.
At RiskBox, we regularly review client contracts from an insurance perspective and we don’t charge for it. Frankly, making sure your insurance aligns with your contractual obligations helps prevent disputes, coverage gaps and expensive surprises down the line – for everyone.
The wrong insurance clause hidden inside it can undermine the protection you thought you had.
Before you sign unfamiliar terms, run them by both your legal team and Riskbox – it could be one of the most valuable decisions you make.
For more advice and support to ensure your business is protected, get in touch with our specialist team today on 0161 533 0411 or email info@riskboxuk.com.
Photo by RDNE Stck project on Pexels
Agencies - June 5, 2026
