National-PC-III Property Provisions & Contract Law medium
A commercial property policy contains a clause fixing damages at $500/day for the insurer's delay in claim payment beyond 30 days after proof of loss. Under Restatement (Second) Contracts §356, this clause is enforceable as liquidated damages only if: A The stipulated amount equals or exceeds the insurer's actual damages in every conceivable case, guaranteeing the insured a recovery no smaller than its proven loss from the delay B The amount is reasonable in light of either the anticipated or the actual loss caused by the breach, and the actual damages from the delay are difficult to prove with certainty C The clause was added by the insurer unilaterally after the loss occurred, since post-loss insertion is what gives the stipulated-damages provision its binding force under the policy D The stipulated per-day amount, when accumulated over the period of delay, exceeds the applicable policy limit and thereby signals a genuine pre-estimate of the insured's harm
