Consequential Loss Insurance
What is Consequential Loss Insurance?
Consequential Loss Insurance, also known as Business Interruption Insurance, is taken out by a business to cover any indirect financial losses sustained over and above the direct losses sustained in the event of the damage to or destruction of property or facilities.
For Consequential Loss Insurance advice and cover, we are accredited financial providers of risk management services and insurance solutions covering a full range of insurable losses, including property, liability, business, fire, theft and vehicle. Chadwicks is an insurance company whose insurance advice and insurance offerings enjoy a high level of comprehensiveness and can extend to include Consequential Loss Insurance.
Example of Consequential Loss Insurance
An example of a scenario in which the value of Consequential Loss Insurance becomes apparent is in the case of a fire on business premises, such as a factory. While ordinary insurance would cover all the direct losses sustained through the destruction of property and premises, there are inevitably a number of additional, indirect financial losses that are sustained as a result of a situation such as this, and the business owner would need to take out Consequential Loss Insurance to protect himself against the reduction in turnover following the fire.
Consequential Loss Insurance covers indirect financial losses such as loss of production output and loss of profits, which could well be a reality in a scenario such as the one outlined above where a fire damages or destroys some or all of the facilities on the business premises
South African insurance companies commonly insure business owners against a number of risks, known as Insured Perils. Of these perils, which can also be insured against for consequential losses, the most common is fire, but there are also a number of other perils such as storms, wind, water, impact by aircraft, impact by road vehicles and cattle, earthquake, earth tremor and landslides that can also qualify as Consequential Loss Insurance.
All Consequential Loss Insurance policies have a predefined indemnity period, during which time the insurer will cover the loss of revenue, giving the business the chance to return to normal trading.