Scope of Cover
Fire and Special Perils Insurance compensates only for material damage to the insured property. It specifically excludes any consequential loss.
In case of a major loss caused by fire, there could be an interruption in business operation leading to reduction in turnover finally resulting in possible loss of profits. However, standing or fixed charges continue to accrue regardless of whether there is any production or not. Such loss cannot be covered under fire policy.
Consequential Loss Insurance compensates for the revenue loss suffered by the enterprise. Hence, for complete protection to the business enterprise and its profitability, Consequential Loss Insurance is very essential in addition to Fire Insurance.
Code: Fire 02