Legal Definitions - failure-to-perform exclusion

Definition: A provision in some commercial general liability policies that excludes coverage for the loss of use of undamaged property resulting from the insured's delay or failure in performing an obligation, or a design defect or failure in the insured's product.

Example: A construction company has a liability insurance policy that includes a failure-to-perform exclusion. If the company fails to complete a project on time and the client suffers financial losses due to the delay, the insurance policy will not cover the damages.

This exclusion is designed to protect insurance companies from claims that arise from the insured's failure to perform their obligations. It is important for businesses to carefully review their insurance policies to understand what is and is not covered.