---
title: "Does the Applicant assume liability for others under its contracts?"
url: https://insuranceposture.com/questions/services-and-contracts/applicant-assume-liability-others-under-contracts
category: "Services and contracts"
canonical_key: q_pro_011
evidence_state: attested
updated: 2026-08-24
---

# Does the Applicant assume liability for others under its contracts?

URL: https://insuranceposture.com/questions/services-and-contracts/applicant-assume-liability-others-under-contracts
Section: Services and contracts
Evidence state: Attested, not tenant-verifiable

Indemnifying someone else means taking on a liability that was never yours, and policies frequently exclude exactly that.

## What the carrier is actually asking

The carrier is asking whether you indemnify or hold harmless third parties under your contracts, taking on liability you would not have had at law.

## Why it is underwritten

Liability policies commonly exclude liability assumed under contract, with an exception for liability you would have had anyway. A broad indemnity can therefore be uninsured. Carriers ask to understand how much of your exposure sits in that gap.

## Where the answer lives in Microsoft 365, Entra ID, and Azure

This is a contract review question focused on indemnity language.

| Platform | Where the setting lives | What has to be true |
| --- | --- | --- |
| Contract estate | Indemnity clauses given to clients and partners | Scope of what you indemnify and whether it exceeds your own legal liability. Attested |
| Policy | The contractual liability exclusion and its exception | What the wording covers, which is usually liability you would have had absent the contract |
| Insured contract | Whether the wording defines insured contracts | Some policies preserve cover for defined contract types, which is worth knowing |
| Reciprocity | Whether indemnities are mutual | One-sided indemnities concentrate risk on you |
| Quantification | Exposure under the broadest indemnities given | A comparison against your limit |

**Broad indemnities can be uninsured**

An indemnity covering all claims arising from your services goes well beyond negligence, into outcomes you did not cause. Policies typically respond only to the portion representing your own legal liability, so the remainder sits with you.

## What a defensible yes requires

- Indemnities given are inventoried with their scope.
- The scope is compared against what the policy would cover.
- Indemnities are mutual where the relationship permits.
- Broad or unlimited indemnities are quantified against the limit.
- New contracts are reviewed for indemnity scope before signature.

## How this answer goes wrong

A standard client contract indemnifies against all claims arising from the services, without limiting to negligence. That assumed liability is broader than the policy responds to, and the gap only becomes visible when a claim arrives.

## If this answer turns out to be wrong

Technology E&O questions describe what you promised your own clients, and the policy language decides how strictly your description of that is held. Whether anything follows from an inaccuracy depends on materiality, on the policy wording, and on the law of the governing state: [whether an answer is a warranty or a representation](https://insuranceposture.com/glossary/warranty). The other consequence terms are collected in the [glossary](https://insuranceposture.com/glossary).

## Frequently asked

### Are indemnities always a problem?

No. Narrow indemnities tied to your own negligence or infringement are normal and usually insurable. Breadth is the issue.

### What is an insured contract?

A defined term in some policies that preserves cover for certain contract types. Check whether your wording uses it and what qualifies.

### Should we refuse to indemnify?

Rarely practical. Narrow the scope, tie it to your fault, and cap it alongside the liability cap.

### Does this interact with the liability cap?

Closely, and indemnities are frequently carved out of the cap. That combination produces uncapped, potentially uninsured exposure.

## Related questions

- [Do the Applicant's client contracts contain limitation of liability clauses benefiting the Applicant?](https://insuranceposture.com/questions/services-and-contracts/applicant-s-client-contracts-contain-limitation-liability-clauses-benefiting)
- [Do written agreements with third parties contain defense/indemnification + insurance requirements?](https://insuranceposture.com/questions/third-parties/written-agreements-third-parties-contain-defense-indemnification-insurance-requirements)
- [Do the Applicant's client contracts exclude consequential damages in the Applicant's favor?](https://insuranceposture.com/questions/services-and-contracts/applicant-s-client-contracts-exclude-consequential-damages-applicant-s)
- [Will the Applicant have an active Tech E&O / Professional Indemnity policy concurrent with this insurance?](https://insuranceposture.com/questions/business-profile/will-applicant-active-tech-e-o-professional-indemnity-policy)

---

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The question library is written in our own wording to reflect the control topics that recur across US cyber application and ransomware supplemental forms. No carrier form is republished.
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