Fire Consequential Loss
The Consequential loss or loss of profits policy generally takes over from where the fire policy leaves off. If a fire loss occurs it may well be a long while before the insured is fully back into operation. During such a period, the insured’s earning power is diminished or drops. On the other hand, certain expenses would continue to be incurred whilst the premises are being rebuilt. Such costs would include rents, rates, wages of skilled staff or salaries of permanents staff and many other expenses.
These standing charges together with estimated net profit of the undertaking comprise the sum insured on gross profit, a reduction of which as a result of insured perils, constitutes a claim under the consequential loss policy. The policy would also cover the expenses incurred in adopting emergency and temporary accommodation, hiring second hand equipment etc in order to diminish the loss. This is known as increased cost of working.
To enable us to quote for this class of insurance, we would require to know: –
- The gross profit
- The wages
- Indemnity period
- Increase Cost of working (optional)
The indemnity period is the period beginning with the occurrence of the damage and ending not later than the maximum period thereafter during which the results of the business shall be affected in consequence of the damage.
As this policy is consequent upon the happening of a fire, the policy exclusions are similar to those under the fire policy.
Depending on the sums insured, this risk may be categorised as a listed risk and the premium rate would have to be communicated by the Association of Kenya Insurers.