Work And Materials Clause

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).

Investopedia explains '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.



comments powered by Disqus
Hot Definitions
  1. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by additional investment would not warrant the expense. A harvest strategy is employed when a line of business is considered to be a cash cow, meaning that the brand is mature and is unlikely to grow if more investment is added.
  2. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will be executed at a specified price (or better) after a given stop price has been reached. Once the stop price is reached, the stop-limit order becomes a limit order to buy (or sell) at the limit price or better.
  3. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The principle states that, for many phenomena, 20% of invested input is responsible for 80% of the results obtained. Put another way, 80% of consequences stem from 20% of the causes.
  4. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The principle states that, for many phenomena, 20% of invested input is responsible for 80% of the results obtained. Put another way, 80% of consequences stem from 20% of the causes.
  5. Budget Deficit

    A status of financial health in which expenditures exceed revenue. The term "budget deficit" is most commonly used to refer to government spending rather than business or individual spending. When referring to accrued federal government deficits, the term "national debt” is used.
  6. Floating Exchange Rate

    A country's exchange rate regime where its currency is set by the foreign-exchange market through supply and demand for that particular currency relative to other currencies. Thus, floating exchange rates change freely and are determined by trading in the forex market.
Trading Center