DEFINITION of 'Work And Materials Clause'

A provision in many property insurance policies that allows the policyholder to use the insured premises to store materials and to use the materials in the manner required by his or her line of work. The work and materials clause circumvents the increased hazard clause that is found in standard fire policies, which states that the insurer would not be liable for losses occurring when a hazard is increased and is known by and within the control of the insured. Without the provision, a policy could be voided for misrepresentation of an undisclosed increased hazard, fraud or concealment (the misrepresentation of a material fact, before or after a loss).

BREAKING DOWN 'Work And Materials Clause'

The work and materials clause acts as protection for policyholders against a claim that the insured knowingly increased a hazard if it can be shown that the materials or work in question were essential to the policyholder's line of work. The clause works to the benefit of the policyholder since without it claims could be denied based on the insured's prior knowledge and control of a hazard.

RELATED TERMS
  1. Full Reporting Clause

    Full reporting clause is an insurance policy provision requiring ...
  2. Cooperation Clause

    An insurance contract clause that requires the policyholder to ...
  3. Valuation Clause

    A provision in certain insurance policies that specifies the ...
  4. Waiver Of Coinsurance Clause

    Language in an insurance policy that says the insurance company ...
  5. Liberalization Clause

    Liberalization clause is an insurance policy provision that allows ...
  6. Waiver Of Inventory Clause

    A clause in an insurance policy that says that the insurance ...
Related Articles
  1. Insurance

    Life Insurance Clauses Determine Your Coverage

    Understanding these key parts of your policy will help you to ensure that your family will be covered.
  2. Small Business

    Moral Hazards: A Bump In The Contract Road

    Learn how this phenomenon can cause a party in an agreement to behave differently than expected.
  3. Insurance

    How Life Insurance Payouts Work

    Life insurance provides peace of mind to policyholders and their loved ones.
  4. Insurance

    Dividend-Paying Whole Life Insurance: What to Know

    Many whole life insurance policies pay dividends. Here are what policyholders need to consider.
  5. Insurance

    How to Protect Your Income No Matter What

    What does it mean to insure your income? Here are a variety of ways to do it and some insights into when it might make sense to invest in income insurance.
  6. Insurance

    Is Loan Protection Insurance Right For You?

    This coverage can keep you from defaulting on your loans when you're in financial trouble.
  7. Financial Advisor

    Mutual Vs. Publically Traded Insurance Companies

    Should you buy your insurance policy from a mutual or publically traded insurance company?
  8. Small Business

    What is a Moral Hazard?

    The risk that a party to a transaction has not entered into the contract in good faith, or has provided misleading information.
  9. Insurance

    Understanding Insurance Claims

    An insurance claim is a formal request made to an insurance company that asks for a payment based on the terms of the policy.
  10. Insurance

    What To Do If Your Insurance Won't Pay

    Before paying for coverage, find out what you need to do to ensure you get paid.
RELATED FAQS
  1. What do insurance companies qualify as hazardous activity?

    Learn about activities that insurance companies classify as hazardous, and the effects this has on individuals seeking insurance ... Read Answer >>
  2. What is the difference between a peril and a hazard?

    Learn about the differences between a peril and a hazard, and discover information on the different classifications of types ... Read Answer >>
  3. Why do insurance policies have deductibles?

    Learn the basic concept of an insurance deductible and why they mitigate moral hazards and provide financial viability to ... Read Answer >>
  4. What is moral hazard?

    An idea that a party that is protected in some way from risk will act differently than if they didn't have that protection. ... Read Answer >>
  5. How does the Affordable Care Act affect moral hazard in the health insurance industry?

    Find out why the Affordable Care Act increases moral hazard in health insurance by pushing consumers farther and farther ... Read Answer >>
  6. How might having insurance increase moral hazard?

    Would you drive safely if your insurance company knew nothing about your driving habits? Learn how insurance increases moral ... Read Answer >>
Hot Definitions
  1. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
  2. Portable Alpha

    A strategy in which portfolio managers separate alpha from beta by investing in securities that differ from the market index ...
  3. Run Rate

    1. How the financial performance of a company would look if you were to extrapolate current results out over a certain period ...
  4. Hard Fork

    A hard fork (or sometimes hardfork) is a radical change to the protocol that makes previously invalid blocks/transactions ...
  5. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  6. Ethereum

    Ethereum is a decentralized software platform that enables SmartContracts and Distributed Applications (ĐApps) to be built ...
Trading Center