Insurance terminology explained in simple terms
Contractual liability is based on contractual agreements and performance commitments between two parties (e.g. principal and agent). This is in contrast to statutory liability, which results from the legal regulations (in particular the law of obligations).
A claim for compensation arises in the case of contractual liability if the obligation to perform is not fulfilled or is culpably delayed or if there is so-called poor fulfilment or poor performance. The latter means that the debtor (e.g. agent) provides the owed object of performance (e.g. software, website or image brochure), but it is not done as it was agreed in the contract.
Most liability insurers exclude contractual liability. This results, for example, from exclusions in the insurance conditions, according to which claims based on a contract or special commitments that go beyond statutory liability are not insured. Some examples of this are:
- Exemptions from liability of the principal,
- Performance obligations from so-called Service Level Agreements (SLAs),
- An agreed reversal of the burden of proof or
- A regulation that excludes the objection of contributory negligence on the part of the principal.
(related terms: statutory liability )
Term: Contractual Liability
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