Using precise contractual language is important—especially when it comes to insurance agreements. By using straightforward language, you can avoid:
- Legal disputes
- Misinterpretation, and
- Costly mistakes
Today, we’re going to discuss an important piece of contractual language: boilerplate clauses. Here’s your guide to boilerplate clauses.
what is a boilerplate clause?
Boilerplate clauses, sometimes called standard, miscellaneous, or general clauses, are found at the end of most legal documents. Since these elements are lumped together at the bottom, it’s common for boilerplate language to be overlooked.
However, boilerplate clauses can serve an important purpose in any contract.
Boilerplate provisions can address a range of things but are most commonly known as the saving grace if a dispute ever arises between the two contracted parties.
Boilerplate language defines the relationship between the parties and can help determine “what happens if a document is declared unenforceable, how disputes will be resolved, which laws govern the contract, and more.”
boilerplate clause examples
To provide some examples, below we will detail common boilerplate language that can be found in a contract.
A severability clause “keeps the remaining portions of the contract in force should a court declare one or more of its provisions unconstitutional, void, or unenforceable.”
A jurisdiction clause determines in which state or county the contracted parties have the right to settle legal disputes.
governing law clause
A governing law clause is “a clause used in legal agreements where you can declare which rules and laws will govern the agreement if legal issues arise.”
dispute resolution clause
Identifies how a dispute between the two parties will be handled if one arises. For example, through negotiation or meditation before court action.
prevailing party clause
A prevailing party clause states that in the case of a legal dispute, the losing party will pay the legal fees for the winning party.
Of course, there are many other clauses that fall under boilerplate language. This is why it’s important to consult a professional about the contractual language used in your insurance agreements—so no stone goes unturned.
the importance of routine insurance audits
As we’ve mentioned, the wording used in an insurance contract is very important. Legal wording can guide the obligations of each party as well as how these specific obligations are interpreted.
For this reason, at benchmark commercial insurance, we recommend that you take a hard look at contractual language—preferably, with a professional at your side.
It is important to not only look at a contract as it’s being created but also to conduct routine insurance audits. This way, you can review and adjust your policy as needed.
Interested in learning more? Read on to find out how to stabilize or reduce your insurance costs.