Many insured consumers may be in for a nasty surprise for
wrongly believing that they enjoy blanket cover from their insurer.
The reality is however that their cover is limited to that
specifically agreed with their insurer.
The cover usually relates only to physical damage sustained to
an insured object, meaning that, unless otherwise agreed, any
consequential loss stemming from the damage to an insured object is
excluded. Consequential loss is best described as an indirect loss,
not related to the value of an insured object.
EXAMPLES OF CONSEQUENTIAL LOSS
Fire insurance
A craft brewery burns down one evening after the electricity was
restored following loadshedding. Due to the extent of the damage
sustained, the brewery is unable to trade for several months. The
physical damage sustained to the brewery's premises and
equipment is recoverable from the brewery's insurer whereas the
consequential loss of profit is not.
