IconAccounting & Tax
IconAppraisers & Valuers
IconArbitration Services
IconAssessors & Loss Adjusters
IconAssist and Lifestyle Benefits
IconAssociations & Institutes
IconBBBEE Consulting and Verification Agencies
IconBroker Acquisition Financing
IconBrokers for Brokers
IconBusiness Process Management
IconBusiness Process Outsourcing
IconCall Centre Outsourcing & Sales
IconCompany Secretarial Services
IconConsumer Protection
IconCorporate Governance
IconCredit Bureaus
IconDebit Order Collection Facilities
IconDefensive Driver Training
IconEducation and Training
IconEmergency Medical Rescue
IconFire, Storm, Flood Damage Specialists
IconForensic Investigation Services
IconHuman Resources
IconIndustrial Cleaners
IconInformation Technology and Software Partners
IconInsurance Companies
IconLightning Damage & Surge Protection Specialists
IconNiche Insurance Products
IconOutbound Sales
IconOutsourcing Companies
IconPolicy Administration
IconPremium Financing
IconPublic Loss Adjustors
IconRating Agencies
IconReference Books & Material
IconRegulatory Authorities
IconRisk Finance
IconRisk Management
IconRisk Surveyors
IconSalvage Operators
IconSpecialized Claims Investigations & Assessing
IconSurveys and Research
IconTraining Courses & Workshops
IconUnderwriting Managers
IconVehicle Accident Management
IconVehicle and Household Risk Inspection Services
IconVehicle Tracking
IconWellness Programs
IconWholesale Brokers
  Subscribe To »

CONSEQUENTIAL LOSS – Does the cover include all the relevant Extensions?







By Richard Stevens, Deputy Bracnch Manager
Renasa Insurance Company Limited

When arranging Consequential Loss (also referred to as Loss of Profits / Business Interruption) cover the focus is always on:

  1. Basis of cover

  2. Indemnity Period

  3. Sum Insured

The above is supplied and underwriters can use same to prepare a quotation in respect of the basic cover afforded by the policy which is normally limited to the Insured’s premises only. It excludes the possibility of events occurring at other premises (Suppliers of raw material to the Insured or Customers to whom the Insured is supplying a product) which could have a negative impact on the Insured’s business operation.  

A number of Extensions are available, offering cover over and above the basic cover and the business profile of a particular instance will determine which extensions are applicable. It is not unusual to find that once a quotation has been accepted that closings will follow which include just about every available Extension (whether or not it is applicable) at no extra cost! There could be a number of reasons for this but apparently it is due to a misunderstanding as to what is intended by the Extensions and how to rate it. The following are some of the Extensions that are available:

  1. Suppliers Premises – the supplier is unable to supply -business is interrupted

  2. Customers Premises – the insured cannot deliver to customer - business is interrupted

  3. Preventions of Access – the insured’s premises cannot be accessed – business is interrupted

  4. Public Utilities – damage at electricity /water plants interrupting supply – business is interrupted

Essentially, these extension cover:

  1. Suppliers Extension: This extension covers loss suffered by the insured as a result of a break in the supply of goods sustained through damage caused by an Insured peril covered by the underlying policy.

    This protection is important to the manufacturers of products reliant upon the supply of raw material from suppliers. It is important to establish the percentage of dependency on a particular supplier as this has a bearing on the rate to be charged. Also required are the full names and addresses of all suppliers.

  2. Customers Extension:This extension covers loss suffered by the insured as a result of a peril covered by the underlying policy at the customer’s premises. Similar to the Suppliers Premises extension, cover is restricted to and rated according to the percentage dependency.

    This cover is required where a large proportion of the insured’s sales emanate from dependence between companies in an associate group. As with the previous extension full names and addresses of customers are required.

  3. Prevention of Access: Access to an insured’s premises may be prevented as a result of damage to nearby or surrounding buildings even although there is no damage to the insured’s premises. Premium is charged on the Indemnity period selected which, normally, can be anything up to 12 months.

  4. Public Utilities: Refers to property at electricity generating stations, sub-stations or transmission networks, gas works, water purification plants etcetera supplied by local authorities / municipalities.

    The interruption (due to an insured peril) of such supplies to the premises of the insured could result in loss. Cover can also be extended at an additional premium to include total or partial failure  of supply to the premises subject to certain exclusions.

There are a few more Extensions not covered above and as indicated above not all are necessarily applicable to a particular case but with a proper analysis and understanding of the client’s needs it should not be difficult to determine which are required. It all comes at a cost obviously but the rates are not exorbitant and advisors should endeavor to include the Extensions when quoting – it was mentioned at the outset that often only the basic cover is arranged. It is imperative that the applicable Extensions are included to adequately protect the client from financial prejudice and the advisors against potential Professional Indemnity claims.                   

Source: Renasa Insurance Company Limited
« Back to previous page Print this page » |

Breaking News »

The Implications Of Overloaded Vehicles On Your Insurance Policy

Overloading – it’s a common occurrence on our roads. If we don’t drive past an overloaded bus, taxi or truck, then we read about another horrific accident caused by one. Hundreds of passengers ...
Read More »


Supporting Brokers In Optimising The Claims Experience Of Their Clients.

TANSA is a team of dedicated professional Attorneys, Forensic accountants, Disaster Claims Experts and Insurance Specialists focused on Insurance Claims & Dispute Resolution. Their mission is to support ...
Read More »


Redefining the role of the broker in a digital age

Technology, data, cultural and behavioural change of the consumer is transforming the role of the broker – and the importance of advice – in South Africa’s intermediary insurance market. Soul ...
Read More »


Premium collections now available through Brolink

Brolink has entered the premium collection market. Says the company’s CEO, Howard John, “After a very successful pilot programme, and working through a number of legislative issues that ...
Read More »


More News »


Healthcare »


Investment »


Life »


Retirement »


From The Glossary »


Net Level Reserve:

A policy reserve computed by a method that makes no allowance for higher first-year expenses. A uniform portion of each year’s premiums paid by the insured is used for reserve purposes. Comes into play in the calculation of in-force premiums where there are cancellations or endorsements part-way through the policy term.
More Definitions »






Contact IG


Media Pack


RSS Feeds

By using this website you agree to the Terms of Use.
Copyright © Insurance Gateway (Pty) Ltd 2004 - 2021. All Rights Reserved.