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Business litigation lawsuit claims breach of insurance contract

In Louisiana and other states, when an insured customer fails to pay the premiums owed to its insurer for ongoing coverage, the insurer may notify the insured that it will cease to provide further coverage as of a certain date. After the policy lapses for nonpayment, the company may file a business litigation lawsuit against the former customer for the past premiums that remain due. Every insurance policy is a contract between the insurer and the insured, and a lawsuit for unpaid premiums is generally based on a cause of action for breach of contract.

An example of a typical business litigation suit for failure to pay premiums was initiated recently in another state. The Nautilus Insurance Company sued Iskcon New Vrindabon, an unincorporated Hare Krishna community, for the amount of $6,771.70, plus interest and costs. The complaint filed by Nautilus alleges that demand for payment was sent to the defendant organization, but it failed to pay. It alleges counts for breach of contract and also for unjust enrichment.

If the defendant chooses to file an answer, it may allege any defenses to the claim that it believes to be relevant. The complaint alleges that the policy is a general liability policy of insurance for the period of Sept. 2015 to Sept. 2016. The policy apparently covers the general activities of the nonprofit organization for injuries or damage claimed by third parties.

The complaint alleges a somewhat unusual payment arrangement in which the premiums for liability coverage are computed based on the organization's gross receipts for the policy period. Due to that provision, Nautilus alleges that it audited defendant's business records in Dec. 2016 to allegedly discover that the organization owed the foregoing amount in premiums for the covered period. In Louisiana, a business litigation claim involving alleged premiums due on a contract of insurance would also be based on a breach of contract theory and potentially, unjust enrichment.

Source: wvrecord.comq, "Insurance company sues New Vrindaban for breach of contract", Nov. 20, 2017

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