Covered Claims is a variable that appears in the Professional Services Agreement Cover Page, in the Key Terms section. This section is for your agreements' key legal terms.
Covered Claims is an optional variable.
How to fill this out
Also known as indemnity, a Covered Claim in the contract is a promise by one company to pay for certain kinds of losses experienced by the other company that result from a lawsuit by someone else. What situations should you be responsible for paying for? What situations should your customer be responsible for paying for?
The default language included, summarized:
You (the Provider) will pay for your customer’s losses caused by:
A lawsuit about your product violating someone else’s intellectual property rights
Your customer will pay for your losses caused by:
A lawsuit about the content they upload to your product violating someone else’s intellectual property rights
A lawsuit about about your customer breaching the restrictions of using your product, such as using it for an illegal purpose
Tip: Covered Claims are about monetary responsibility, not necessarily legal fault, similar to how an insurance company might pay for an accident even if it isn’t their fault. Covered Claims are not required, but they are common in these types of contracts.