We promised the e-commerce app launch for November 1st. Scope creep and bugs pushed it to December 15th. The client missed Black Friday and Cyber Monday. They are suing for $150,000 in “lost projected revenue” and breach of contract.
Key Takeaways
- “Delay in Delivery” Exclusion: Many standard E&O policies EXCLUDE claims arising from delays unless the delay was caused by a specific negligent act (like accidental deletion), not just “working slowly.”
- Force Majeure: Did you miss the date because of illness? Or just poor planning?
- Projected Sales are Speculative: Insurance lawyers love to argue that the client’s “projected millions” are fantasy.
- Scope Creep Defense: If you can prove the client kept adding features, the delay is their fault.
The “Why”: The Business Risk Exclusion
The Trap: Insurers view missing a deadline as a Business Risk, not an insurable event. If they covered missed deadlines, every freelancer would just claim insurance whenever they ran late.
You need a policy that covers “unintentional breach of written contract” and does not have a broad “Delay / Failure to Supply” exclusion.
The Investigation: I Quoted 3 Major Carriers
1. Hiscox
- My Analysis: Their standard policy often excludes claims arising solely from a delay. However, if the delay was caused by a “Wrongful Act” (e.g., you introduced a bug that took 2 weeks to fix), coverage triggers.
2. Philadelphia (PHLY)
- My Analysis: They offer broad “Miscellaneous Professional Liability” which can include “failure to render services.” They are better for consultants managing timelines.
3. CFC Underwriting
- My Analysis: A UK-based powerhouse often used for tech. They have very specific “Breach of Contract” coverage that includes failure to meet milestones, provided it wasn’t intentional.
[IMAGE: Timeline graphic showing “Original Deadline” vs “Actual Launch” vs “Black Friday”]
Comparison Table: Delay Coverage
| Carrier | Covers Missed Deadlines? | Breach of Contract? | Best For… |
| CFC | Yes (Specific) | Yes | Agencies |
| PHLY | Conditional | Yes | Consultants |
| Hiscox | Limited | Negligence Only | Solos |
Step-by-Step Action Plan
- Gather Change Orders: Compile every email where the client asked for a “small tweak.” This explains the delay.
- Check Policy for “Delay Exclusion”: Read the exclusions list carefully.
- Notify Carrier: Report the “Demand for Damages.”
- Argue “Projected” vs “Actual”: Let the lawyers fight over the made-up sales numbers.
FAQ
Does my contract save me?
Only if you have a “Limitation of Liability” clause excluding “Consequential Damages” (Lost Profits).
What if I got sick?
See the “Force Majeure” clause in your contract. Insurance might help defend the contract terms.
Is this covered by General Liability?
Never. GL covers physical damage only.