Which items are included as an insured contract under BOP's contractual liability exclusion?

• A. Premises lease, elevator maintenance agreement, railroad sidetrack agreement, easement or license, and indemnification of a municipality as required by ordinance.
• B. A contract to lease equipment for a month.
• C. A contract for professional architectural services.
• D. A default on a loan agreement.

Answer: (A)

Under a Businessowners Policy, the contractual liability exclusion removes coverage for liability the insured assumes under a contract, but there’s an exception for insured contracts. These are contracts where the insured’s liability to others is created by the contract itself, not by the insured’s own negligent acts. The items listed as insured contracts—premises leases, elevator maintenance agreements, railroad sidetrack agreements, easements or licenses, and indemnification of a municipality as required by ordinance—fall into this category because the contract imposes obligations (like indemnification or consent to an easement) that the insured must uphold. When the liability arises because of those contractual obligations, the policy provides coverage under the insured contract provision.

A contract to lease equipment is not a premises lease and isn’t typically treated as an insured contract. A contract for professional architectural services involves professional services liability, which is handled differently. A default on a loan agreement relates to financing, not to contractual indemnification or similar obligations covered by the insured contract clause.