Liquidated Damages

A dollar amount set in a contract ahead of time as the penalty for breaking it, so nobody has to prove the actual loss later.

This is a friendly general explanation, not legal or policy language. Exact coverage depends on your policy, carrier, and state. 🤝

Written and reviewed by the We Insure Things team — licensed independent insurance agents. Last reviewed July 23, 2026. Questions? Ask a licensed agent.