contract frustration insurance

Contract frustration insurance is a form of trade insurance that compensates insureds for losses they incur when actions of a foreign government or conditions in a foreign country prevent fulfillment of a contract. Among the types of events insured under a typical contract frustration policy are the following.

• Unilateral termination of a contract by a government entity
• Nonpayment by a government entity after a contract is fulfilled
• Cancellation of a legally valid import or export license
• Government default on an award following arbitration of a contract dispute
• Other governmental acts that frustrate the fulfillment of contracts

Regarding coverage related to contracts, typically the amount covered must be specified in the insured contract, and the policyholder must have fulfilled its obligations under the contract.