subject: Other Exclusions - Consequential Loss - Part I [print this page] ARPI policies in the UK insurance market expressly exclude consequential loss. The following is a typical form of wording as found in the ABI standard wording which excludes: "consequential loss or damage of any kind or description except loss of rent when such loss is included in the cover under this policy". In other words, if the policy expressly states that rent is covered, then such express cover is not to be excluded by the consequential loss provision. Other policies phrase the provision differently whilst some expand upon it by, for example, specifically excluding "delay", "loss of market" and "idle hours". The exception, however, raises two questions, one of which may appear academic, though it is necessary to answer it in order to understand the second question.
First, does an ARPI policy cover consequential loss without the exclusion? Secondly, what loss is included in the phrase "consequential loss or damage"?
As to the first question, the authorities tend to suggest that a property damage policy will not cover such items as loss of profits unless it is specifically covered under the policy. Unfortunately, most of the cases are of an "antique" variety and do not provide us with a legal basis for this assumption. In the matter of the arbitration between Charles Wright and Charles Pole, 1 AD & E, 621, Mr Wright made a demand before the arbitrator in respect of rent paid by him to his landlord following a fire which destroyed the Ship Inn. He also claimed for rent in respect of other houses or apartments whilst the apartments damaged in the inn by the fire were undergoing necessary repairs. It was argued that Wright's interest was only in the fabric of the inn and the offices. The arbitrator, nevertheless, found that the assured was entitled to be paid the loss. On appeal, their Lordships found that although "the interest in question (the financial loss) might have been the subject of insurance, an arbitrator cannot take into consideration the possible profits of the inn under the shape of an interest in buildings ... if a party would recover such profits as these, he must insure them qua profits".
