What defines an Insured Contract?

An Insured Contract is specifically defined as a contractual agreement in which one party assumes the tort liabilities of another party, effectively providing coverage for liabilities that may arise from the actions of that other party. This type of contract is significant because it extends liability coverage to various types of agreements that a business might enter, particularly in contexts such as leases, contracts with vendors, or agreements with municipalities.

In commercial casualty insurance, recognizing an Insured Contract enables businesses to understand their exposure to liabilities and the extent to which they are protected under their insurance policies. The assured assumption of another party's tort liability is critical because it reflects the transfer of risk that the insurer is willing to cover, typically under commercial general liability policies.

Other contract types mentioned do not fall under the definition of Insured Contracts. For example, contracts solely revolving around property insurance or those pertaining to workers' compensation do not involve tort liability assumptions and thus lack the essential criteria that categorize them as Insured Contracts. Likewise, contracts related to the borrowing of vehicles do not involve the assumption of another's liabilities and focus more on the use or possession of property rather than liability coverage for torts.