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Understanding financial loss cover

Are you covered against your liability for financial loss? - Thursday, May 30, 2019

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Understanding financial loss claims J Bennett and Son Insurance Brokers High Wycombe

Are you covered against your liability for financial loss?

 

Financial loss is increasingly offered as an extension within traditional PUBLIC AND PRODUCTS liability policies. But what does it mean, do you need it and, if so, are you adequately covered?

Financial loss is the term used by insurers to refer to an economic loss incurred by a third party where there is no physical injury or damage, unlike the majority of claims, which arise from injury, loss or damage to property.

To explain, if a business suffers ‘financial loss’ as a result of the actions of your business, but doesn’t incur injury or damage, they could still claim against you. Such a claim could easily run into tens of thousands of pounds, which is why it’s important you have the correct level of insurance in place.

Example of financial loss

For example, a flooring contractor is contracted to lay a floor in a warehouse, but does not follow the spec and lays a floor that isn’t fit for purpose. The floor has to be re-laid, delaying the delivery of a new machine. As a result, the client has to pay additional storage and transportation costs for the new machine, and claims against the flooring contractor. These costs are met by the flooring contractor’s financial loss insurance policy.

Is financial loss cover included in your policy?

Some liability policies include financial loss cover, while others don’t or have restrictions in place that limit cover Here’s a brief guide to the different liability covers and whether, as a rule, they include ‘financial loss’ cover:

Public liability covers your liability to ANY OTHER PARTY ,OTHER THAN YOUR EMPLOYEES, WHERE LOSS OR DAMAGE IS CAUSED BY YOUR NEGLIGENCE. STANDARD WORDINGS DO NOT INCLUDE FINANCIAL LOSS.

Product liability covers your liability to ANY OTHER PARTY ,OTHER THAN YOUR EMPLOYEES, WHERE LOSS OR DAMAGE IS CAUSED BY SOME DEFECT IN YOUR PRODUCT ARISING FROM YOUR NEGLIGENCE. STANDARD WORDINGS DO NOT INCLUDE FINANCIAL LOSS

Financial loss is a complicated area requiring specialist assistance. As your broker, we will be happy to look at your individual circumstances and advise whether your existing liabilities cover provides adequate protection for financial loss or if you need to add relevant extensions.

To find out more, please call us on 01494 450 450 or email us at insure@jbennett.co.uk today.

 

Sources:

FINANCIAL LOSS. What is it, and when is it covered? A report from a Working Party of the IUA’s Liability Underwriters’ Group in association with RPC. Available as pdf download at:

http://www.iua.co.uk/IUA_Member/Publications/Financial_Loss.aspx
https://www.tradesmansaver.co.uk/financial-loss-insurance

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What people say about us...

J Bennett & Son has looked after our insurance for more than 20 years. Their advice on risk management has been invaluable, they even arranged for a specialist surveyor to ensure that our new buildings were fit for purpose.
Michael O’Connor
Adcal Labels Ltd
High Wycombe
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