I signed a $20,000 contract to create a series of Halloween-themed reels. Due to illness (the flu, or possibly burnout), I missed the October 31 deadline. The brand is now suing me for breach of contract, seeking the return of the $10,000 deposit plus “consequential damages” for alleged lost projected revenue, totaling $50,000.
Key Takeaways
- Breach of Contract Exclusion: Standard General Liability covers negligence (accidents). It explicitly excludes Breach of Contract. If you promise to do work and don’t do it, that’s a business risk, not an insurance claim.
- Errors & Omissions (E&O): This is the only policy that might help. It covers “failure to render professional services.” However, even E&O often excludes simple “failure to deliver on time” unless it was due to a covered error.
- Force Majeure: Your defense lies in the contract, not the insurance. Did you have a “sickness/incapacity” clause?
- Refunds are on You: Insurance never pays for the return of your fees (the deposit). It only pays for extra damages the client suffered.
The “Why” (The Trap): Business Risk
Insurance is not a warranty for your work ethic.
If you simply ghost a client, that is not an accident.
The Clause: “This policy does not apply to claims arising out of breach of contract, warranty, or guarantee.”
However, if you did the work but did it wrong (e.g., posted the wrong video file), that is an Error (covered by E&O). Missing the deadline is harder to cover.
[IMAGE: Graphic showing “GL Policy” shielding from “Slips” but letting “Contract Breach” arrows pass through]
The Investigation: I Called Them
I asked, “I missed a deadline and I’m being sued.”
1. Chubb (Media E&O)
- The Analysis: They might cover the defense costs if the brand alleges negligence. But they won’t pay the $10k deposit back. They might pay the “consequential damages” (the lost sales) if the delay was caused by a “Wrongful Act” defined in the policy.
2. Thimble
- The Analysis: Their Professional Liability is basic. It likely excludes pure contract disputes regarding deadlines.
3. Contract Lawyer
- The Reality: This is a contract fight. Insurance is likely to deny. You need to settle/refund.
Comparison Table
| Damage Type | General Liability | Errors & Omissions (E&O) |
| Return of Deposit | No | No (You pay) |
| Lost Sales (Client) | No | Yes (Maybe) |
| Legal Defense Costs | No | Yes |
Step-by-Step Action Plan
- Return the Money: Refund the deposit immediately. This shows good faith and kills 50% of the lawsuit.
- Check “Force Majeure”: Does your contract excuse delays due to illness?
- Notify E&O Carrier: File the claim as “Professional Negligence.” Let them decide if it’s covered. Do not admit “I was just lazy.” State “I was incapacitated.”
- Settlement: Offer to do a make-good campaign for free in exchange for dropping the suit.
FAQ
What if I died?
Your estate would be sued. Life insurance covers your family, but Key Person insurance covers the business loss.
Can I buy “Deadline Insurance”?
Essentially, no. That’s called “Performance Bonding,” and it’s for construction, not influencers.
What if the product arrived late?
If the brand sent the product late, causing you to be late, you are not in breach. Document the shipping dates!