Contractual Liability & Performance Bonds

Contractual Liability & Performance Bonds

Contractual liability insurance is designed to protect businesses against liabilities that arise from contracts they have entered into. This type of insurance is essential for companies that engage in contracts of any nature, as it indemnifies the insured against legal liabilities stemming from loss or damage to property that is in their custody or control, particularly due to negligent acts committed by employees, as determined by a competent court in the Republic of Kenya.

Overview

When businesses enter into contracts, they often assume certain liabilities that could expose them to financial risks. Contractual liability insurance provides a safety net, ensuring that companies are protected against claims that may arise from their contractual obligations. This coverage is particularly important in industries where contracts are a fundamental aspect of operations, such as construction, consulting, and service industries.

Scope of Cover

The contractual liability and performance bonds policy typically includes the following coverage:

1. Court Judgments/Awards: Compensation for any financial awards made against the insured as a result of legal action stemming from contractual obligations.
2. Defense Costs: Coverage for legal fees and expenses incurred while defending against claims made in relation to contractual liabilities.
3. Fees and Expenses: Reimbursement for any additional costs associated with the legal process, including expert witness fees and administrative expenses.
4. Loss of Documents: Protection against the loss or damage of important documents related to the contract, ensuring that the insured is compensated for any financial loss incurred.

Benefits of Contractual Liability & Performance Bonds

• Financial Protection: This insurance provides a crucial safety net against potentially significant financial losses resulting from contractual obligations, allowing businesses to operate with confidence.
• Risk Management: By having contractual liability insurance, businesses can better manage their risks associated with contracts, ensuring that they are prepared for any unforeseen legal challenges.
• Enhanced Credibility: Companies that carry this type of insurance demonstrate to clients and partners that they are responsible and committed to fulfilling their contractual obligations, enhancing their reputation in the market.
• Peace of Mind: Knowing that you have coverage in place allows business owners to focus on their operations without the constant worry of potential legal claims arising from contracts.

Requirements for Enrollment

To enroll in a contractual liability and performance bonds policy, businesses typically need to provide:

• Business Details: Information about the nature of the business and the types of contracts regularly entered into.
• Contract Information: Details of specific contracts that require coverage, including the scope of work and associated risks.
• Identification: A valid Kenyan ID and PIN for verification purposes.