Held Covered / Automatic Cover Extension Clause
This clause automatically brings newly added risks, business locations or activities of the policyholder into the existing cover for a limited period, without requiring separate advance notification.
- Clause type
- Extension
- Origin/Market
- DACH – statutory
- Favours
- Insured
- Negotiability
- Market standard
Purpose
Growing or changing businesses establish new premises, expand their activities, or acquire new risks without the existing insurance contract immediately capturing this formally. The held-covered extension closes this gap by automatically bringing newly arising, similar risks into cover without prior notification, usually for a limited notification and reporting period of a few months.
Effect and limits
The automatic extension is typically limited to risks similar in nature to the activity already insured and excludes extensions that are alien to it or materially higher risk. Once the reporting period expires, the policyholder must formally notify the new risk for it to be permanently included in the contract, on the terms and at the premium then applicable; if notification is not given, automatic cover for that risk ends.
Negotiation and practice
For fast-growing or internationally expanding businesses, the reach of the held-covered extension – particularly the reporting deadline and the definition of “similar” risks – is an important negotiation point. Insurers frequently require an annual declaration of exposures to formally capture the automatically covered growth and adjust the premium accordingly.