In short. Cross liability is not a concept of Spanish law but a contractual clause of Anglo-Saxon origin that solves a very specific problem. Article 73 of the Spanish Insurance Contract Act covers the obligation to indemnify 'a third party', and the insureds under a single policy are not third parties to each other: damage caused by one company to another falls outside. The cross liability clause confers that status on them mutually. What it does not do is multiply the limit: unless expressly agreed otherwise, all the insureds share the same capacity.
The average cost of a claim in the construction class reaches €75,117, the highest figure in the industrial universe recorded by UNESPA in its industrial claims statistics for the period August 2024 to July 2025. It is also the setting in which the greatest number of separate companies share, at the same time, a single site, a single risk and, very often, a single policy.
And that is where a paradox almost nobody explains appears: a construction site can have eight companies on it and no third parties at all.
What is cross liability?
According to the explanatory note published by Estamos Seguros, the UNESPA initiative, cross liability is the liability arising for an employer from bodily injury or material damage suffered by the employees of its contractors and subcontractors, and under it 'each and every one of the contractors and subcontractors involved in the same works or operations is given the status of a civilly liable third party in relation to the others'.
The full formulation is worth holding on to, because the abbreviated version in circulation — 'it covers subcontracted workers' — blurs the essential point. What the clause does is not add a group of protected persons: it changes the legal position of the insureds in relation to each other within the contract.
And here comes the warning that governs everything else: cross liability is not a legal concept. There is no provision of Spanish law that regulates it, defines it or even mentions it. It is a contractual clause, inherited from Anglo-Saxon practice, whose scope depends entirely on how it is drafted in the policy wording. There is therefore no statutory minimum content to fall back on when the drafting is thin.
The problem it solves: who counts as a 'third party' under article 73
The starting point is article 73, first paragraph, of the Spanish Insurance Contract Act (Law 50/1980). It defines liability insurance as insurance under which the insurer undertakes to cover the risk that the insured incurs an obligation to indemnify a third party for loss or damage caused by an event contemplated in the contract.
The phrase 'a third party' is not rhetorical: it is the perimeter of the contract. If the injured party is not a third party in relation to the insured, there is no insured risk to cover.
Now transpose that to a policy with several insureds. Company A and company B both appear as insureds under the same contract. Company A damages an installation belonging to company B. Is B a third party? Within that policy, no: it forms part of the insured circle. The damage occurs, A's liability towards B exists under article 1902 of the Spanish Civil Code, but it falls outside the scope of the insurance. Policies often reinforce this with an express exclusion of damage between insureds.
The cross liability clause solves exactly that, and it solves it by the only route available: contractually. It provides that, for the purposes of the contract, each insured shall be treated as a third party in relation to the others, as though each held a separate policy. It does not change the law; it changes the agreed perimeter.
Do you know whether the policy covering your site or your plant treats the insureds as third parties to each other? Request a review of your programme.
The temporary business consortium: the natural use case
The temporary business consortium (UTE) is the setting in which the problem appears most clearly, for two reasons worth citing precisely.
The first: a UTE has no separate legal personality. This is established by article 7, paragraph Two, of Law 18/1982 on the tax regime of business groupings and temporary business consortia. It is not a company that can be insured as an autonomous entity with its members outside; the insurance contract ends up including as insureds both the UTE itself and the companies that make it up.
The second: the deed of incorporation must state that liability towards third parties for acts and operations carried out for the common benefit shall in all cases be joint, several and unlimited for its members, under article 8, letter e, point eight, of that same Act. It is worth underlining exactly where each rule sits, because much of the sector's commentary attributes both to article 7: the absence of legal personality is article 7.Two; the provision on unlimited joint and several liability is article 8, letter e, point eight.
The practical result is a single policy with several insureds who are jointly and severally liable outwards and who are not third parties inwards. Without a cross liability clause, damage caused by one member company to another — or to another's employees — is not damage to a third party.
The same reasoning applies to two further situations that are common in large accounts: groups of companies with a single policy, where subsidiaries appear as insureds and intra-group claims are in the same position, and industrial plants with permanent contractors brought into the site owner's programme. On construction sites there is also the question of how this interacts with contractors' all risks cover, which has its own allocation rules; we deal with those in insurance on site: CAR and liability, two covers that do not overlap.
Cross, employers' and contractors' liability: three separate sections
This is the sector's dominant confusion and deserves to be seen side by side. All three can sit within the same policy, each with its own sub-limit, and none of them replaces the others.
| Section | What it responds to | Towards whom | Nature |
|---|---|---|---|
| Cross liability | Damage caused by one insured to another insured under the same policy, including injury suffered by that insured's personnel | Between co-insureds: contractors, subcontractors, members of a UTE or subsidiaries within a group | Contractual clause. No statute regulates it; its scope depends on the policy wording |
| Employers' liability | Civil damages payable to the insured's own employee for an accident at work, over and above Social Security benefits | Against a claim by the company's own employee or their dependants | Policy section resting on a statutory regime: articles 1902 and 1903 of the Spanish Civil Code and the duty of protection under Law 31/1995 |
| Contractors' and subcontractors' liability | Liability passed to the insured where someone else is directly liable and cannot meet the claim | Against injured third parties, in default of the party directly liable | Policy section built on a secondary liability mechanism; it presupposes insolvency or default by the party primarily liable |
Two boundaries are worth stating expressly. Employers' liability covers the claim of the company's own employee; cross liability operates between co-insured companies, and conflating them is the most widespread conceptual error. And contractors' liability presupposes an order — the party directly liable first, the insured afterwards — whereas cross liability acts directly and with no order of priority at all. We set out how contractors' liability works in contractors' and subcontractors' liability.
What the cross liability clause does not do
Three qualifications that completely change how a policy wording reads.
It does not multiply the sum insured. Article 27 of the Spanish Insurance Contract Act provides that the sum insured represents the maximum indemnity payable by the insurer for each claim. The cross liability clause treats each insured as a third party but, unless expressly agreed otherwise, they all share the same capacity. If three co-insured companies on a site claim against each other arising out of the same event, there are not three limits: there is one.
It is usually optional and sub-limited. It does not come as standard in most programmes and, where it is included, it frequently arrives with a sub-limit below the policy's main limit. That sub-limit, and not the main limit, is what measures real exposure to a claim between insureds, subject to the particular conditions of each contract.
It must be reviewed together with the waiver of subrogation. That is its companion piece. Article 43 of the Spanish Insurance Contract Act governs subrogation by the insurer that pays and specifies that the limitation on that right falls away where the liability is covered by a contract of insurance, in which case subrogation is limited in accordance with the terms of that contract. Without an express waiver of subrogation between co-insureds, the practical effect of the cross liability clause can be largely neutralised: the insurer indemnifies one insured and then claims against another.
One open question deserves to be handled honestly. Where a policy excludes damage between insureds, is that exclusion a limiting clause — subject to the requirements of prominence and written acceptance in article 3 of the Spanish Insurance Contract Act — or merely a clause defining the scope of cover? The general doctrine was settled by the Spanish Supreme Court, First Chamber sitting in plenary session, in judgment 853/2006 of 11 September: a clause defining the scope of cover specifies which risk is covered, in what amount, for what period and in what territory; a limiting clause restricts or conditions the insured's rights once the risk has materialised. Applied to this particular clause, the classification depends on the actual drafting, and there is no verified case law specifically on the point. The operational conclusion is a sober one: do not entrust your cover to a later argument about the nature of the clause; review the wording before you sign.
That advice becomes imperative in a large account. Article 44, second paragraph, of the Spanish Insurance Contract Act removes large risks contracts from the mandate of article 2, so that the Act ceases to be mandatory and the protective formalities of article 3 do not apply. The law will not rescue a large account from a badly negotiated wording. Only prior negotiation will.
We review the wording, not only the price, before work starts on site. Talk to us.
The role of an independent broker
Where a cover has no statutory minimum content, all the value lies in the drafting. Two policies with the same premium, the same limit and the same section heading can produce opposite outcomes when damage occurs between co-insureds, depending on how the word 'third party' is defined, whether the sub-limit is single or per insured, and whether there is a waiver of subrogation. As an independent brokerage registered with the Spanish DGSFP under reference J0140, we act on the client's mandate: we negotiate that text with access to the whole market and, when a claim arises, we defend the company's position before the insurer.
To place this clause within the full picture of your company's exposures, types of company liability sets out the different covers and where each one stops, and our corporate liability page explains how we structure the programme.
Frequently asked questions
What is cross liability? The clause under which, within a single policy covering several insureds, each and every one of them is given the status of a civilly liable third party in relation to the others, in the wording of the Estamos Seguros explanatory note (UNESPA). It is not a legal concept: its scope depends on the policy wording.
Why isn't a liability policy enough when several companies are involved? Because article 73 of the Spanish Insurance Contract Act covers the obligation to indemnify a third party, and the insureds under a single policy are not third parties to each other. Damage caused by one to another falls, in principle, outside the contract.
What happens in a temporary business consortium? A UTE has no separate legal personality (article 7, paragraph Two, of Law 18/1982) and its deed of incorporation must state that liability towards third parties for acts and operations carried out for the common benefit shall in all cases be joint, several and unlimited for its members (article 8, letter e, point eight). Hence the single policy and the need for the clause.
How does cross liability differ from contractors' liability? Contractors' liability presupposes that someone else is directly liable and cannot meet the claim. Cross liability operates directly between insureds under the same policy, with no order of priority.
Does it increase the policy limit? No, unless expressly agreed. Article 27 of the Spanish Insurance Contract Act sets the sum insured as the maximum per claim, and the insureds share that capacity. The cover is also usually sub-limited.
Sources and legislation
- Law 50/1980, the Spanish Insurance Contract Act, articles 3 (limiting clauses), 27 (sum insured), 43 (subrogation), 44, second paragraph (large risks) and 73, first paragraph (definition of liability insurance).
- Law 18/1982 on the tax regime of business groupings and temporary business consortia, article 7, paragraph Two (absence of legal personality) and article 8, letter e, point eight (statement the deed must contain regarding joint, several and unlimited liability towards third parties).
- Spanish Civil Code, article 1902.
- Law 31/1995 on the Prevention of Occupational Risks (duty of protection, cited for comparison with employers' liability cover).
- Spanish Supreme Court, First Chamber sitting in plenary session, judgment 853/2006 of 11 September (distinction between clauses defining the scope of cover and limiting clauses).
- UNESPA, Estamos Seguros explanatory note on cross liability.
- UNESPA, industrial claims statistics, August 2024 – July 2025 (average claim cost in the construction class).
This information is for guidance only and does not constitute binding advice. Cover, limits and exclusions are governed in all cases by the particular conditions of each policy. New Brokers Correduría de Seguros, S.L., registered with the Spanish DGSFP under reference J0140.
