"...In interpreting documents relating to a contract of insurance, the duty of the court is to interpret the words in which the contract is expressed by the parties, because it is not for the court to make a new contract, however reasonable, if the parties have not made it themselves. Thus, this policy is designed to pay all the Standing Charges and Gross Profit in the event of a fire damage/loss. > Consequential losses, or, damages which are consequence of a certain action resulting by the policyholder or a third-party (whether intentional or by accident) and not an outcome of an uncertain event are not covered. Whenever any loss incurred due toinsured perils to an insured business establishment or property or machinery, the insurance policies compensate for the loss of property. 2. If smoke from the fire damages the restaurant, causing operations to cease for weeks, the loss of business revenue is an indirect loss. Your travel insurance covers you for the missed flight. If for example a computer box fails electronically and ignites – setting the vehicle alight causing it to burn out – the fire damage to the vehicle will not be excluded, but the electronic failure of the computer box will be excluded (if it could be determined during the investigation of the claim as the cause of the damage). It is typically on a party’s list of most important clauses that may require approvals at board level if certain requirements are not met. A consequential loss insurance policy for fire or other special perils financially compensates the owner for the lost business income due to fire. Imagine you are in Mumbai. The insurance company refuses, saying their only contractual obligation is to replace the damaged shingles. "The happening of the event does not of itself entitle the assured to payment of the sum stipulated in the policy, the event must, in fact , result in a pecuniary loss to the assured, who then becomes, entitled to be indemnified subject to the limitations of his contract. An example of consequential damages would be a driver getting into a car accident because, instead of paying attention to the road, he was focused on another car accident that had just happened across the street. In Industrial All Risks Insurance Policy it is stated that - the Insurers agree that if during the period of insurance, the business carried on by the insured at all the premises specified & listed in the Schedule is interrupted or interfered with in consequence of loss destruction or damage indemnifiable under Section-I, then the Insurers shall indemnify the Insured for the amount of the loss as hereinafter defined from such interruption or interference provided that the liability of the Insurers in no case exceeds the total sum insured or such other sum as may hereinafter be substituted therefor by Endorsement signed by or on behalf of the insurers. A consequential loss under home contents insurance is, for example, if the household contents have been damaged by water after a house fire.. What benefits does my private liability insurance offer in the case of consequential loss? This brings us to the next challenge: when are these types of breakdowns excluded? It is designed to cover the financial losses due to interruption of business while a damaged property is being repaired or replaced. at 26. For example simply broadly stating that 'Consequential Loss means any and all indirect or consequential losses' is of next to no real assistance. For example, if a tornado damages a flower shop, the owners would most likely lose revenue due to the fact that the building needs repairs. Introduction Business Interruption, 1 Blanket Business Interruption, 2 Contingent Business Interruption, 3 Rental Value or Rental Income, 3 Extra Expense, 4 These are losses which may be fairly and reasonably in the contemplation of the parties when the contract was entered into. The said loss has to have proximately related and/or in real likelihood to be suffered by the insured.Thus the expression 'in consequence of' or 'resulting from' has to be interpreted as direct consequence of the peril as against the remote one. The phrase “consequential or special losses, damages or expenses” did not mean those losses coming within the second limb (arising from special circumstances known at the time the contract was entered into). We clarify the differences between consequential loss and consequential damage with real-life examples, so it’s easy for you to explain policy exclusions to clients. These are all … But there were two holes in this system. Rather the clause had a wider meaning of financial losses caused by guaranteed defects above and … Those damages might include the loss of property value due to the title defect, as well as other consequential damages, such as lost profits or rents, additional carrying costs such as taxes, property insurance, and taxes, costs to remove, redesign, or relocate improvements, and even emotional distress. The Policy can also, like the fire policy, be extended to … Clients should be careful not to confuse consequential loss with consequential damage as the wording only refers to consequential loss. By replacing income lost as a result of some event outside the control of the business, the company is better positioned to overcome the adverse conditions … 4. Consequential Damages (CD’s) Consequential damages occur when the Contractor breaches a contract and is liable for all foreseeable losses incurred by the Owner. In the case of General Assurance Society Ltd. For example simply broadly stating that 'Consequential Loss means any and all indirect or consequential losses' is of next to no real assistance. Essentially, the consequential loss results from the inability to use certain things needed to operate the business; consequently, that inability results … RNS Associates of qualified and experienced professionals with unmatched acumen and knowledge in diverse practice area. The careful reading of the clause would show that the wordings used in the clause providing the liability of the insurer is towards the 'business interruption' in consequence of the damage by the perils covered and/or loss resulting from such interruption or interference. Consequential damages are also known as special damages, and are damages that are not a direct result of an incident itself, but are instead consequences of that incident. Lost profit, lost rents, and lost business opportunities are examples of consequential damages that could be incurred as a result of a direct physical loss … The countrywide lockdown by the Government of Indiain exercise of power under the Disaster Management Act, 2005, as a preventive measurefor containment of COVID-19, has brought great uncertainty in the corporate sector. If you do not include a specific loss then the meaning will be open to dispute later.  if you have any queries about Santam products. Coverage Most insurance policies do not provide coverage for indirect losses. Therefore, it is settled law that the terms of the contract has to be strictly read and natural meaning be given to it. The Australian case law on consequential loss has changed considerably over the past te… Mechanical, electronic and electrical breakdowns, failures or breakages are only excluded if they were brought about by some or other inherent defect in the vehicle itself. In commercial insurance, it could happen when a fire takes place at a warehouse (the direct loss or damage) and the business, being unable to operate as a result, loses its revenue (the consequential loss). at 26. Where the subject- matter insured is destroyed or so damaged as to cease to be a thing of the kind insured, or where the insured is irretrievably deprived thereof, there is an actual total loss. The damage due to these perils leads to stoppage of production and also resultsin loss of profit in addition to repair or replacement cost of the affected machinery. *Please note that the claim should be referred to Legal for recovery actions should the conduct of the garage, which lead to the damage, be construed as negligent. For example, If the hides are so damaged that it is impossible to prevent the hides from the destruction and it may become a mass of … Another modification would … Consequential loss insurance is not intended to cover actual property damage from storms, fire or theft. The principle of indemnity is intrinsic to all insurance contracts and the insured cannot be allowed to make profit out of the insurance. > Consequential losses, or, damages which are consequence of a certain action resulting by the policyholder or a third-party (whether intentional or by accident) and not an outcome of an uncertain event are not covered. Consequential Damages (CD’s) Consequential damages occur when the Contractor breaches a contract and is liable for all foreseeable losses incurred by the Owner. By replacing income lost as a result of some event outside the control of the business, the company is better positioned to overcome the adverse conditions and move forward. Accordingly, the loss of profit which has the direct nexus with the peril insured would be recoverable under the policy as against any other loss.Even under landlord insurance the loss of rental income is covered, if the property becomes uninhabitable due (a damage to the structure of the property and /or contents of the property) to reasons mentioned in the Policy documents not otherwise. Neither the Administrator, in such capacity, nor the Company, nor the Project Company, nor any of their officers, members, employees or Affiliates shall be liable for punitive, consequential, special, indirect or exemplary damages of any nature including, but not limited to, damages for lost profits or revenues or the loss … Even within that limit, however, he cannot recover more than what he establishes to be the actual amount of his loss. Similarly, the main clause providing for the insurance under Consequential Loss (Fire) Insurance states that - the company agrees, subject to the Special Conditions and Exclusion contained herein and endorsed or otherwise expressed herein or endorsed or otherwise expressed hereon and also to the conditions and exclusions contained in the Fire Policy covering the interest of the insured in the property at the premises.That if any building or other property or any part thereof used by the Insured at the premises for the purpose of Business, be destroyed or damaged by the perils covered under the Fire Policy, and the business carried on by the insured at the premises be in consequence then of interrupted or interfered with, then the Company will pay to the insured in respect of each item in the schedule hereto the amount of the loss resulting from such interruption or interference in accordance of the Provisions contained herein . order of lockdown. Introduction Business Interruption, 1 Blanket Business Interruption, 2 Contingent Business Interruption, 3 Rental Value or Rental … But there were … Consequential Damages in case of Travel You are bound for an official trip and unfortunately, you miss your flight. Consequential Losses and Boat Insurance. Some types of consequential loss are insurable under standard direct damage or time element coverage forms; others are not. Business casualty insurance policies almost always include direct loss insurance. We will pay for the actual loss of business income you sustain due to the necessary suspension of your “operations” during the period of “restoration.” The suspension must be caused by the direct physical loss, damage, or destruction to insured property. It’s only a difference of two words – loss vs. damage – but it can be very confusing for your car insurance clients to understand. They go beyond the express terms and conditions of the contract itself and into the actions that flow from the breach. A consequential loss clause provides protection to a business or owner should they experience loss of income, resulting from things such as theft, fire, floods and other natural disasters. Consequential damage is included under comprehensive cover and is, The fan blade falls within the exclusion of mechanical breakage and, The consequential damage to the radiator and engine, This brings us to the next challenge: when are these types of breakdowns excluded? However, business interruption coverage ought not be used to put the insured in a better position than it would have occupied without the interruption. In a scenario like this, the business usually should have business interruption insurance in place to provide for the consequential loss. 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