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Understanding Business Insurance: Does it Include Breach of Contract?

Sep 27, 2023

Business insurance

Understanding Business Insurance: Does it Include Breach of Contract?

When you enter into a business agreement, you must have a contract that clearly states the terms of the transactions. Contracts include payment amounts, deadlines, and other stipulations that are put in place to protect the parties from unfair actions or business practices. Contracts are legally binding agreements that cannot be broken without the offending party suffering some consequence for their actions. 

What Is a Breach of Contract? 

A breach of contract is when one of the parties does not hold up to their end of the deal. Missing payments, not carrying sufficient insurance, or failing to pay taxes or other expenses are a few reasons why a breach of contract lawsuit may be filed. In most cases, the breach of contract is unintentional and occurs due to an unexpected or unplanned event. Possible solutions are depending on what type of breach has occurred. 

What Happens if You Are Sued for Breach of Contract? 

If you are sued for breach of contract, several things may occur. You may be ordered to pay restitution to the other party or compensatory damages if your actions caused them future revenue. The judge may order you to comply with your obligations or pay punitive damages. The outcome will depend on how both parties deal with the process and who the judge believes to be more credible. 

Who Is at Risk for This Type of Lawsuit? 

Any person or business can be at risk for a breach of contract lawsuit. Suppose you enter into a written or verbal agreement to complete a transaction. In that case, you have essentially entered into a legally binding contract that cannot be broken without both parties experiencing some consequences. It's essential to think clearly about any agreement you enter into. Always do everything possible to protect yourself and your company if the unthinkable occurs. Talk to an attorney to ensure you understand all the fine print before signing the dotted line. 

What Insurance Will Protect You from a Breach of Contract Lawsuit? 

If you are concerned about a breach of contract lawsuit, having a professional liability or errors and omissions policy will protect you. This covers you if you cannot deliver on a product or service. It will also cover errors in your work or oversights due to an inexperienced employee. Negligence or missed payments may also be protected. Although this type of insurance isn't necessary, it is beneficial if something goes wrong.  

 Secure Your Business with Professional Liability Coverage from Fuller Insurance Agency

Ensure your business's financial security by contacting the experts at Fuller Insurance Agency. Our agents specialize in professional liability coverage, providing you with the essential safeguard your business needs to thrive without worry. Contact us today for tailored protection and suitable coverage

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