What defines an insured contract and when would coverage apply to indemnity obligations arising from it?

• A. An insured contract is any contract; coverage always applies if indemnity exists.
• B. An insured contract is a contract the policy recognizes as one that could create liability for the insured; coverage applies if the contract is listed or if the liability arises from the insured's operations within terms.
• C. An insured contract never triggers coverage.
• D. An insured contract only triggers coverage if the insured signs an endorsement.

Answer: (B)

An insured contract is a contract the policy recognizes as one that could create liability for the insured under an indemnity clause. Coverage for indemnity obligations arises when that contract is listed on the policy as an insured contract (in the endorsements or schedule) or when the liability comes from the insured’s own operations under the contract and falls within the terms the policy covers. This means coverage isn’t automatic for every contract—the contract must be designated as an insured contract or the indemnity obligation must arise from the insured’s work under a contract that the policy contemplates.