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Consequential Loss (Machinery Breakdown)

Consequential Loss (Machinery Breakdown)

Introduction:

Take Control of your business's destiny with the help of SBI General Insurance
SBI General Insurance can help you to successfully overcome these situations and put you firmly in control of your business. With SBI General's Consequential Loss (Machinery Breakdown) Insurance Policy, you can safeguard your business profits against possible loss due to business interruption.
Indemnity Period - The indemnity period commences on the date of damage and lasts until such time as the business is restored to its pre-damage level or the end of the indemnity period is reached, whichever comes first. A consequential loss insurance policy insures earnings of the business lost during the indemnity period. Hence, selection of the indemnity period is of utmost importance.

Key features

  • Generally the Machinery Breakdown Policy does not cover the financial loss suffered due to interruption of business operations whilst the damaged Machinery is being repaired or replaced. This policy offers a solution by covering profit lost due to reduction in turnover arising from interruption of business following damage to the Machinery insured. This policy can be taken only in conjunction with Machinery Breakdown Policy and would trigger only if the loss is admissible under Machinery Breakdown Policy.

Scope

  • The scope and purpose of consequential loss insurance is:
  • To make good the loss of net profit due to stoppage of business as a result of an insured peril.
  • To pay the standing charges which continue to accrue in spite of stoppage of business
  • To pay the additional expenditure incurred by the insured to maintain normal business activity, during the period in which the business is affected.
  • Further, on payment of additional premium, the following coverage's can be opted:
  • Supplier's extension
  • Customer extension
  • Failure of Public power supply/Gas works/water works
  • Spoilage Risk extension

Sum Insured

  • The Sum Insured is based on the gross profit of the business. Gross Profit is defined as the sum of Net Profit and insured standing charges. Additional Items which can be incorporated as part of the Sum Insured :
  • Wages
  • Insurance of lay off and/or retrenchment compensation
  • Auditors fees

Exclusions

  • This insurance does not cover any loss resulting from damage occasioned by or through or in consequence, directly or indirectly, of any of the following occurrences, namely :-
  • Loss or damage to machinery or other items which are not listed in the list of machinery insured even if the consequence of material damage to an item indicated in the list of machinery insured is involved.
  • Loss or damage caused by any faults or defects existing at the time of commencement of this insurance within the knowledge of the insured or his responsible representatives whether such faults or defects were known to the Company or not.
  • Shortage, destruction, deterioration and spoilage of or damage to raw materials, semi finished or finished products or catalyst or operating media (such as fuel, lubricating oil, refrigerant, heating media and the like even if the consequence of material damage to an item indicated in the list of machinery insured is involved.
  • Any restrictions on reconstruction or operation imposed by any public authority.
  • Alterations improvements or overhauls being made while repairs or replacements of damaged or destroyed property are being carried out.
  • War, Invasion, act of foreign enemy, hostilities or Warlike Operations (whether war be declared or not), Civil War.
  • Mutiny, Civil Commotion assuming the proportion of or amounting to a popular-rising, military rising, insurrection, rebellion, revolution, military or usurped power.
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