subject: Other Exclusions - Consequential Loss - Part III [print this page] First, the court decided that loss of market could not be described as a physical loss and therefore would have to fall under the heading "damage". This links in closely with the discussion in Chapter 1 on damage. The court referred to the definition in the Oxford Dictionary from which it decided that damage had a great many different meanings, but that it should be read together with the rest of the insuring clause and thus the words "loss", "damage" and "deterioration" were all governed by the adjective "physical" inserted before "loss". The judge said "It is a physical loss, physical damage and physical deterioration and that is the conclusion at which I will arrive". This certainly seems to be a sounder reason for the apparent rule excluding consequential loss (irrespective of the express terms) although an alternative reason might simply be that consequential loss is excluded as a result of an implied term in a property damage contract which should be implied as a result of market custom and practice. This, of course, is not a complete answer as it would "beg the question" as to the width of the implied term.
In summary, without an express exclusion clause, an all risks property damage policy does not cover loss which is not directly as a result of physic al loss or (physical) damage to the property insured. Thus, with or without the exclusion, loss such as loss of profits, increased working costs, workers standing idle, management time, standing charges (such as wages, taxes, rates, rent, interest) and downturn in the available market, would all be unrecoverable under an ARPI policy. These headings of consequential loss all have something in common, namely financial loss, but what about circumstances where physical damage may have occurred to part of the property which effectively reduces the value of another part of the property? Although financial in concept, pragmatically there is greater connection with the physical loss or damage. Would such a loss be recoverable with or without consequential loss exclusion under an ARPI policy?
