Read the Contract Against the Policy
You are covered. Are you covered for this?
The idea
Risk you accept in a contract is only transferred if your insurance actually covers it.
In the real world
A contractual obligation excluded by the policy that was assumed to cover it.
Going deeper
A contract creates obligations and an insurance policy defines what is covered, and neither is drafted with the other in view. Risk is only genuinely transferred where the two overlap.
Accepting a contractual obligation on the assumption of cover, then having a claim declined under an exclusion, is a common and expensive discovery. The check is unglamorous: take the obligations you have accepted and read them against the policy's exclusions and conditions. It is the kind of task that only gets done before a claim if someone deliberately schedules it.
Where it stops applying
Policy interpretation is specialist work and exclusions are often ambiguous until tested. A broker or lawyer reviewing the pair is usually worth the cost on material contracts.
Why it matters
The gap between the two is discovered at the worst possible moment.
Try this today
Take one contractual obligation and check it against your policy's exclusions.
Test yourself
A business accepts an obligation on the basis that it is insured, and the claim is declined under an exclusion. Where did it go wrong?
Show the answer
The two documents were never read against each other. The contract created the liability and the policy defines what is covered, and neither is drafted with the other in view. Insurance transfers risk only where its terms and the obligation actually overlap.
Learn this in the feed Answering from memory, then again days later, is what makes it stick.