What is the subsequent loss?

The subsequent loss is the type of loss that occurs when the circumstances outside the company's owner make it impossible to use the company's company equipment or assets to carry out common activities of this business. Losses of this type are usually considered indirect in that they may occur due to the occurrence of other events that have resulted in some kind of damage and indirectly prevented the owner from performing his normal business. While most direct damage types are covered with different types of business and real estate, indirect or subsequent loss usually applies only to specialized insurance such as business interruption insurance.

A number of situations can lead to a subsequent loss. One common example would be a power outage that prevented the retail store to remain open during the usual operating hours. The indirect impact of this outage is that the trade is experiencing loss of income due to the closure until the power source is restored and the trade can be reopened.

Other situations in which subsequent loss may develop is in case of breach of the contract. Should the supplier fail to supply goods or services under the provisions of the contractual agreement that exists between the seller and the client, this may affect the ability of this client to adequately operate his customers. This indirectly leads to a loss of income that is likely to continue until the supplier delivers the promised products, or the client receives similar products from the new seller.

There are also cases where there is a certain type of direct damage, which in turn triggers a certain type of subsequent loss. A natural disaster, such as a flood or fire, would cause great damage to property. This direct damage would be covered under the floods or fire insulted, allowing the company to repair the interior and exterior of the damaged building or buildings. Disaster insurance would not be expanded to compensate the company's owner for the lossprized income while these repairs were made. In order to cover the subsequent damages that arose from the temporary closure of the business operation, the interruption insurance would allow the owner to apply for an approximate amount of income that would be generated if the disaster would never occur.

While insurance to cover the occurrence of subsequent loss can be somewhat expensive, coverage can provide owners of business a lot of comfort. By replacing the income lost as a result of some event outside the business control, the company is better off to overcome unfavorable conditions and move forward. Many businesses find that even if the coverage of the company's interruption is used only once every few decades, this case has more than the cost of premiums paid over the years.