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LSDefine
Simple English definitions for legal terms
failure-to-perform exclusion
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A quick definition of failure-to-perform exclusion:
A failure-to-perform exclusion is a rule in some insurance policies that says they won't cover certain things. For example, if someone doesn't do what they promised to do, or if their product doesn't work properly, the insurance won't pay for any damage or losses that result. It's like a way for the insurance company to protect themselves from having to pay for things that aren't their fault.A more thorough explanation:
Definition: A provision in some commercial general liability policies that excludes coverage for the loss of use of undamaged property resulting from the insured's delay or failure in performing an obligation, or a design defect or failure in the insured's product.
Example: A construction company has a liability insurance policy that includes a failure-to-perform exclusion. If the company fails to complete a project on time and the client suffers financial losses due to the delay, the insurance policy will not cover the damages.
This exclusion is designed to protect insurance companies from claims that arise from the insured's failure to perform their obligations. It is important for businesses to carefully review their insurance policies to understand what is and is not covered.