What is a contractual liability exclusion?

A contractual liability exclusion is a clause in an insurance policy that limits the insurer’s obligation to fulfill any claim related to a contract. This type of exclusion is found in many insurance policies, including those in California. Contractual liability exclusions limit the amount that an insurer is willing to pay if a claim involves a breach of contract. This may be when a company has a contractual agreement with another party, and they fail to deliver on their end of the bargain. In this situation, the other party may make a claim against the company’s insurance policy, but the contractual liability exclusion will limit the insurer’s responsibility to the amount agreed upon in the contract. The contractual liability exclusion is important because it helps to reduce the risk of an insurer having to pay out a large sum of money if a claim is made. Without this clause, an insurer may be liable for a much larger sum as they may have to cover the costs of a breach of contract. It’s important for companies in California to read the fine print of their insurance policies to ensure that they are properly protected from claims involving contractual liability. Without this clause, companies could face a hefty bill for an unexpected claim.

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What is a contractual liability exclusion?

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