What constitutes a "breach of contract" in insurance?

A "breach of contract" in insurance occurs when one party fails to fulfill the obligations set forth in the insurance agreement. This could manifest in various ways, such as a policyholder not paying the premium by the due date or an insurer failing to pay a valid claim covered by the policy. The essence of a breach is the failure to adhere to the specific terms that both parties have agreed upon; thus, a clear understanding of what those terms are is essential for both the insurer and the insured.

Making verbal agreements instead of written contracts does not itself constitute a breach, although it may complicate enforceability. Understanding the terms of the agreement is crucial but does not involve failure to perform. Providing additional coverage not stipulated in the agreement could imply a modification of the contract rather than a breach.