Understanding Failure to Perform Exclusion in Liability Policies
Definition & meaning
The term "failure to perform exclusion" refers to a specific provision found in some commercial general liability insurance policies. This provision excludes coverage for losses related to the inability to use undamaged property. Such losses may arise from the insured's failure to meet contractual obligations, delays in performance, or defects in design or execution of a product or service as promised. However, it is important to note that this exclusion does not apply to losses resulting from sudden and accidental physical damage to the product or work after it has been used as intended.
Table of content
Everything you need for legal paperwork
Access 85,000+ trusted legal forms and simple tools to fill, manage, and organize your documents.
This term is primarily used in the context of commercial liability insurance. It is relevant in civil law, particularly in cases involving contracts and insurance claims. Understanding this provision can help businesses navigate their insurance coverage and potential liabilities. Users can manage their legal needs by utilizing templates from US Legal Forms, which are drafted by licensed attorneys to ensure compliance with applicable laws.
Key Legal Elements
Real-World Examples
Here are a couple of examples of abatement:
Example 1: A contractor fails to complete a project on time, leading to a loss of use of equipment that remains undamaged. The insurance policy may deny coverage for this loss due to the failure to perform exclusion.
Example 2: A manufacturer produces a faulty product that does not meet the promised specifications. If the product remains undamaged but causes a loss of use, the insurer may invoke this exclusion to deny the claim. (hypothetical example)
State-by-State Differences
Examples of state differences (not exhaustive):
State
Key Differences
California
Specific exclusions may vary based on state insurance regulations.
Texas
May have different interpretations regarding what constitutes a design defect.
New York
State laws may impose stricter requirements for proving accidental damage.
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
Common Misunderstandings
What to Do If This Term Applies to You
If you find yourself facing a situation where the failure to perform exclusion may apply, consider the following steps:
Review your insurance policy carefully to understand the exclusions and coverage limits.
Document any incidents related to the loss of use of property.
If necessary, consult with a legal professional to assess your options.
Explore US Legal Forms for templates that can help you manage your legal documentation effectively.
