Business insurance is a vital aspect of protecting your business from various risks and liabilities. However, when it comes to breach of contract, it’s important to understand if your business insurance policy covers it.
In simple terms, breach of contract refers to a situation where one party fails to fulfill their obligations as outlined in a contractual agreement. This can lead to legal action and financial loss, both of which can have a significant impact on your business.
The good news is that some types of business insurance policies do cover breach of contract. Let’s take a closer look at the types of coverage that may be relevant to this risk.
1. General Liability Insurance
General Liability Insurance is a type of policy designed to protect businesses from a range of risks, including bodily injury, property damage, and advertising injury. Depending on the specific terms of your policy, it may also cover breach of contract.
While General Liability Insurance is not typically tailored to cover breach of contract specifically, it may include coverage for damages resulting from a breach of contract that causes property damage or personal injury.
2. Professional Liability Insurance
Professional Liability Insurance, also known as Errors and Omissions Insurance, is designed to protect businesses against claims of negligence or errors made in the course of providing professional services.
This type of policy may include coverage for breach of contract claims arising from professional services. For example, if you provide consulting services and breach a contract with a client, your Professional Liability Insurance policy may cover the resulting damages.
3. Directors and Officers Insurance
Directors and Officers Insurance, also known as D&O Insurance, provides coverage for claims related to the decisions and actions of business directors and officers.
In some cases, breach of contract claims can be brought against business directors and officers. A D&O Insurance policy may provide coverage for these claims, although the specific terms of the policy will vary.
It’s worth noting that not all business insurance policies cover breach of contract claims. In some cases, a separate Contract Liability Insurance policy may be required to provide coverage for this type of risk.
In conclusion, it’s important to review your business insurance policy carefully to determine the extent of coverage for breach of contract. If you’re uncertain about your level of coverage, speak with your insurance agent or an experienced attorney to ensure that your business is fully protected.