- The Agreed Liability exclusion means that there is no cover if the Insured takes over someone else’s liability (unless the Insured would have been liable anyway).
- This is best illustrated by way of example:
- The bank becomes liable when the Insured, who is testing the bank’s software, accidentally deletes customer information. It is acceptable for the Insured to assume this liability because the Insured would inevitably become liable anyway (since the bank would sue the Insured to make its recovery).
- A bank might require its suppliers to provide them with a blanket indemnity, regardless of whether the supplier’s fault has been proved or not. This would not be covered.
- Example: The Insured is Greenbank’s IT supplier and as a result of a defect in the software developed jointly by the Insured and Greenbank, many of Greenbank’s customers lost money. Although it is not clear whether the defect was caused by the Insured or by Greenbank, their contract automatically makes the Insured liable for the loss. This would not be covered.