In many states a Contractual Liability Insurance Policy may be structured as a Failure To Perform F2P Policy.
A F2P CLIP will only pay if the Provider (Obligor) fails to pay valid claims due to insolvency.
In this type of situation the provider may utilize the policy to satisfy regulatory or compliance requirements or to satisfy a client’s request for a secure financial backing for a Service Contract.
Some states have “cut-through” conditions in a Service Contract that allow a consumer to take a claim directly to the carrier if a provider doesn’t pay a valid claim. This is independent of the contractual relationship between the provider and the carrier.