Does insurance pay always in case of fire?

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End of the year is approaching and, as usual, here it is a first summary of those many questions that our clients put us during the inspection of their firms.

Companies are becoming more and more aware of the risks they face during their business activities, especially if we are abroad and the texts of the insurances are written in local language.

Once again, we found considerable confusion about the difference bewteen two expression: “direct” damage and “indirect” damage.

The questions we received may be summarized as follows:

1. Mark rents in Hungary some buildings to some manufacturing companies: suddendly a fire develops within the premises of his property.

Question: «If due to the fire, my buildings became uninhabitable, and I can no longer collect incomes from the rent, does my fire insurance cover me?»

Answer: The damages resulting from fire are paid by the fire insurance. The revenues from the leasing of the premises, however, can be covered by another specific insurance for this particular risk. This issue should be discussed with your risk manager.

2. Gianfranco owns a company operating for manufactoring purpose for the Italian parent firm. A machine needs to be  transported in Italy and installed into a new production line.

Q: «If, during the transport, the truck suffers an accident, and the machinery goes destroyed, the production line can not be set in motion. Who pays for the damaged machine? Who insures the long delay in the commissioning of the production line?»

A: The risks of transport shall be compensated by the” cargo insurance “. The delay in which the production line was put into operation may be avoided through the adoption of insurance  as well as risk management solutions, which should be evaluated case by case.

3. Andrea runs a plastic company.

Q: «Winter is here: if the roof, due to heavy snowfall collapses, are we covered by the business insurance? If we need to stop the production for a few months, are we insured? If the stock is unusable and we might no longer be able to deliver our products to our clients, is it possible to protect our reputation somehow?»

A: The collapse due to snow pressure building is paid by the insurance company. In this case, the “direct damage” is covered.

The stop of the activity can be insured through a different product, available on the local market with the name of “Business Interruption”.

Possible damages to companies’ image and reputation can be prevented and solved through the adoption of specific risk management solutions.

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