A material damage fire policy provides compensation following destruction of or damage to buildings, contents and stocks but does not provide any cover for loss of use of this premises and the loss of trading that follows. It is inevitable that a fire or other damage in business premises will lead to a partial or total disruption in production, sales or whatever activity that is carried on. As a result, the turnover and earning capacity of a business are diminished. This is the subject-matter of a consequential loss insurance.
COVER
A consequential loss policy protects the earning capacity of a business and supplements any trading maintained after a fire (or other insured damage) to enable all the over heads of the business which do not reduce proportionately with trading to be met. It also enables the business to achieve the level of net profit which would have been earned but for the fire.