Cross-liability insurance covers liability claims by an insured entity against another entity insured by the same policy. Standard liability insurance does not cover liability claims made by an insured entity against another entity insured by the same policy. Cross-liability coverage is typically offered as a rider for standard liability insurance policies. It is commonly provided with policies which insured multiple entities or individuals and reduces the disadvantage of insuring multiple entities under a single policy as opposed to taking out individual policies for each entity.
In business insurance, cross-liability coverage is often found on policies which insure multiple companies or subsidiaries under a single policy.
In private insurance, cross-liability coverage is sometimes offered as a rider for liability car insurance policies and other forms of liability insurance in which liability claims between individuals insured by the same policy are normally excluded from coverage. In Switzerland, some car insurance providers offer cross-liability coverage as a rider for their liability car insurance policies. Typically, the coverage provided by cross-liability riders is lower than the liability coverage provided by the standard policy.
Example of cross-liability coverage:
A family owns two cars and both cars are insured by a policy which includes cross-liability car insurance. During a parking maneuver, the husband’s vehicle collides with his wife’s vehicle in the driveway and causes serious damage. Because the family’s car insurance policy includes cross-liability coverage, the wife is able to claim insurance coverage for the damages to her vehicle as per the terms and conditions stated in the insurance policy.