Consequential Loss Claims Examples
Infolink – September 2008 Issue
Staying in Business – When the gloves come off
No one can be in two places at once. If a client is in court, they can not be running their business and stand to lose a lot of revenue and profit. At last there is a liability policy that recognises this and keeps your client in business when the gloves come off. Vero Liability's Consequential Loss policy.
Consequential Loss and Business Interruption covers are common in fire insurance, but this concept has never before been applied to liability insurance and is a product unique to Vero Liability.
While maintaining theme park equipment, an employee serviceman falls to his death. Right at the start of peak season, OSH closes the park for two months to conduct an investigation into the accident.
Traditional liability policies only cover legal costs and damages. Standard Public, Employers' or Statutory Liability insurance would not cover two months of lost revenue for the theme park. Vero Liability's new Consequential Loss Policy would.
An electrical products supply company is defending a product liability case in court. Drowning in legislation and paperwork, the managing executives cannot focus on running the business. Despite the best efforts of staff, they lose their key account to a competitor.
If management is tied up, if premises or equipment are taken out of commission, if products and services are suspended, if important clients are lost to competition – Vero Liability Consequential Loss insurance can cover it. Nothing else will.
Vero Steps into the ring
No one wants to see clients coming out of court, only to find their business has suffered significant losses and cost. Consequential Loss policy aims to put clients back on the same financial footing as if the liability claim had never happened.
Brokers have a responsibility to fully inform clients of their exposure to financial loss in the event of a third party legal claim against them. This policy is Vero Liability's way of stepping into the ring in support of brokers. Now, when the gloves are off for your client, legal action does not have to be a knockout punch to their business.
Counting the cost of consequential losses
The client is an engineering servicing company with a three year maintenance contract with a major manufacturer, focusing on a particular specialist plastic moulding machine. The client's employee was servicing the machine when he dropped a tool into the hopper, damaging the injector screw. The machine will take months to fix. The manufacturer's costs are covered by Vero Liability Public Liability Insurance. But because the machine is out of action, it does not need maintenance so the client loses 60% of their whole servicing business revenue while the machine is down. Vero Liability Consequential Loss insurance would have covered this revenue.
The client is a manufacturer of electronic controller panels for appliances. A faulty batch resulted in higher warranty claims for the appliance manufacturer. The client's Public Liability covered the appliance manufacturer's financial loss, but not the client's own costs associated with tracing down the problem and purchasing alternative supplies until the problem was solved. That is a cost the Vero Liability Consequential Loss insurance would have covered.
These are illustrative examples only and reference to the actual policy wording should be made.
