What Type of Insurance Covers Breach of Contract

When you enter into a contract with another party, you trust that they will fulfill their end of the agreement. Unfortunately, breaches of contract do occur, and they can result in serious financial losses. That`s why it`s important to understand the types of insurance that can cover breach of contract.

One of the first types of insurance that comes to mind when thinking about breach of contract is liability insurance. Liability insurance can cover damages that result from a breach of contract, provided the breach falls under the policy`s definition of covered risks. For example, if you run a business and have a contract with a vendor that they breach, resulting in a loss of income for your business, your liability insurance could potentially cover those losses.

Another type of insurance that can cover breach of contract is errors and omissions (E&O) insurance. This type of insurance is specifically designed to protect businesses and professionals who offer services from claims of negligence or errors. E&O insurance can cover damages resulting from a breach of contract if the breach is due to an error or omission by the insured party.

Directors and officers (D&O) insurance can also provide coverage for breach of contract. This type of insurance is typically purchased by companies to protect their board members and executives from lawsuits brought against them in connection with their roles within the organization. D&O insurance can cover damages resulting from a breach of contract by a board member or executive.

Finally, cyber liability insurance is becoming increasingly important in today`s digital age. This type of insurance can cover damages resulting from a breach of contract that occurs as a result of a cyber attack. For example, if a hacker gains access to your customer information and breaches a contract with a vendor as a result, cyber liability insurance could potentially cover the resulting damages.

In conclusion, there are several types of insurance that can cover breach of contract, including liability insurance, errors and omissions insurance, directors and officers insurance, and cyber liability insurance. It`s important to carefully review each policy to understand the extent of coverage and ensure that your business is adequately protected.