What is meant by Liquidated Damages?

  • Sometimes it is difficult to quantify a loss in monetary terms. For that reason, the Insured and a third party may agree that if a loss were to occur, then the guilty party’s liability will be a pre-agreed amount.
  • Liquidated damages is an amount of money agreed upon by the parties to a contract which one will pay to the other upon breaching the agreement.
  • Liquidated damages are not covered by the policy.
General Liability