Breach of Contract
Definition - What does Breach of Contract mean?
A breach of contract is the violation of a contract due to the failure to meet the terms of the contract without any viable legal excuse. It usually attracts a civil lawsuit, which may result in compensation awarded to the aggrieved party. In the context of insurance, it is the breach of the contractual obligations binding the insured and the insurer.
Insuranceopedia explains Breach of Contract
The insurer once committed to providing an insurance policy is bound by law to provide support and assistance to the insured in the event of an insured risk occurring. Conversely, the insured is bound by law to make timely payments as provided for in the insurance policy. If either of the parties does not fulfill the terms of the insurance policy, a breach of contract is said to have taken place. For example, if the insurance company denies the right of a claim by the insured or pays only a fraction of a legitimate claim, the insurer breaches the contract.
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