Contractual Liability Insurance


Specialty Products CLIP

Contractual Liability Insurance Policy - Specialty Products CLIP

A contractual liability insurance policy (CLIP) may be used for specialty products to:

  • Satisfy a regulatory requirement
  • Provide risk transfer
  • Demonstrate financial backing
Solutions using a CLIP for Specialty Products are custom-designed based on each unique situation. Examples of products include Security Deposit Waiver, GAP Waiver, Event Cancellation, Lockout, Refund Guarantees, selected Travel Benefits, and many additional items. InsurTechs and product innovators often use a CLIP for new product development and embedded solutions.

Specialty Product structures vary greatly and may include:

  • 1st dollar coverage
  • Excess coverage
  • Stop loss coverage
  • SIR (self-insured retention)
  • Deductibles
  • Failure to perform coverage
Pricing for a Contractual Liability Insurance Policy CLIP can be as straightforward as a cost per unit (see rate builder below) or a single rate for a program. A claim reserve is often established to cover expected claims based on frequency and severity analysis. If the structure is an Excess or Stop Loss, the expected claim reserve may be satisfied by a SIR or Deductible. Regulatory requirements may also impact the structure.

Example of How to Build a Price for a Contractual Liability Insurance Policy CLIP

Building a contractual liability insurance policy rate CLIP often utilizes a straightforward method involving four key pieces of information: frequency, severity, target loss ratio, and fees. This Rate Builder allows you to plug sample pieces of data to generate a sample rate. This is an example only and does not constitute an offer to sell or purchase insurance.

Example Rate Builder