What Is a Primary and Noncontributory Clause in Business Insurance?

A primary and noncontributory clause changes how responsibility is shared between insurance policies when more than one policy could apply to a claim. The primary portion means your insurance is the first to respond to a covered clai and it pays before any other applicable insurance. The noncontributory part essentially says the additional insured’s insurance does not share in the loss and their policy is not used unless your policy limits are fully exhausted.

In a real world scenario it'd look something like this:

• You perform work for a third party
• That party is added as an additional insured on your policy
• Your policy includes a primary and noncontributory clause
• A claim occurs related to your work
• Your policy pays first, and the other party’s policy is not required to contribute

So, in other words, clients tend to use this to shift more of the risk to your end so they can save money in the event of a claim. It is also paired with an additional insured clause to further insulate for risk.

Primary and noncontributory wording is most commonly tied to liability coverage that can include these three policy types:

You'll typically only need a primary and noncontributory clause most often in these scenarios:

• Client agreements: Clients require your policy to respond first for claims tied to your work
• Commercial leases: Landlords often require tenants to carry primary coverage
• Construction contracts: General contractors require subcontractors to assume primary responsibility
• Vendor agreements: Businesses may require vendors to carry primary and noncontributory coverage