Page 301 - Fire Insurance Ebook IC 57

The Insurance Times

Question & Answers

Q1. Discuss concept of issuing consequential loss
insurance policies.

Ans. Fire insurance is designed to provide protection in respect
of loss of, or damage to buildings, machinery, fixtures,
goods etc by fire and or other insured perils, fire
insurance covers 'material damage'.

However, an indemnity for the material damage alone
does not provide complete protection to the insured, who
also suffer trading losses due to total or partial stoppage
of business. The Consequential Loss or Business
Interruption policy attempts to make good these losses.

Q2. Discuss the trading losses that may result
from stoppage of business.

Ans. The trading losses which result from stoppage of
business may be considered under these three headings:
(a) Net profit : This is broadly defined as the margin
of income over all the expenses.

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