Explain it like I'm five
We're making insurance so simple, now even 5-year-olds can understand it.
What is consequential damage?
A boy and his younger sister plan to make a castle out of playing cards. They build a beautiful 2 storey mansion of cards and happily marvel at their creation. But unfortunately, their dog Charlie, knocks of one card from the bottom and the entire castle topples off!
As a consequence of accidentally toppling one card, other cards fall too. This is quite like Consequential Damage in insurance.
Consequential Damage: A concept that has always riddled and troubled us and is the cause of a lot of agony during claims, mainly because the concept is not that clear to many.
So here we are rewinding the basics again and this time we want to focus on this elephant in the room. What is Consequential Damage?
By definition it means, when one unforeseen event leads to a series of other events, causing damage that was not a result or outcome of the first unforeseen event. Confusing right?
Let us explain it to you with some examples for a clearer picture:
Consequential Damage in case of mobiles
- A customer called us in a huff one day, his new phone was stolen. But more than the phone, he was sad for his honeymoon’s photos being lost. 😞
Ouch! While our mobile insurance definitely covers theft of the phone but not what people lose as a consequence of the same, for example their data, their important contacts or any other important documents in the memory card. Therefore make sure, you back up all your data and contacts on a regular basis.
- We all know we shouldn’t store passwords on phone as if the phone is stolen, you may be at risk for cyber fraud. But still a lot of people store them somewhere for easy reference. But trust us, the thieves out there have wise whiskers, they just know where to look. So if unfortunately, your phone gets stolen (touchwood again) and your accounts are compromised, that’s consequential loss. So, make sure you wipe out these details from your phone today itself.
Consequential Damage in case of car
- Imagine you are in Mumbai. The weather is all nice and bright. You leave from office early, with a firm belief that your car will take you home safely. Suddenly, your car has a flat tyre. You think it will be a matter of minutes as you have a Stepney. But lady luck isn’t in a good mood and it starts raining cats and dogs (in Mumbai, you just cannot tell) and your engine gets filled with water and suffers damages, now this is consequential damage. Also, this is one of the biggest confusions people have, your engine damage, until and unless it happened at the same time an accident happens, is not covered under your basic comprehensive car insurance cover, you need an Engine Protection cover for it.
- Your car meets with an accident on the road and stops moving. Now, it requires to be towed to the nearest garage. But the towing guys are not the softest ones out there, so if while towing your bonnet gets affected and there are scratches on it. The damages due to towing would fall under consequential damage and will not be covered by your car insurance policy. So, the tip here is that be extra careful when the hook goes under your car.
Consequential Damage in case of travel
- You are bound for an official trip and unfortunately you miss your flight. Your travel insurance covers you for the missed flight. But suppose, you miss an important meeting because of the missed flight and that results in a loss for your business, that will be consequential loss. What we say here is that have enough time between connecting flights so that such a situation doesn’t happen in the first place.
Consequential Damage in case of property
- You have a shop and an insurance for your shop and the contents. Unfortunately, there is a fire inside your shop (we hope that never happens). But if it does, you will be covered for the loss to your shop and the contents. But you will not be covered for the loss your business might face because of the damage to your shop. What you can do is have your books updated on a cloud drive as well so that you can get back into action asap.
This may not be the most comforting article as it tells you situations that may go wrong and where by law we also might not be able to help you. But what we can do is to explain you what can be done to minimize and avoid these losses. After all, our world revolves around making things transparent for you.
And if you still feel there are some grey areas, do leave us a note!
The topic for the blog was suggested to us by Mr. Kunjan Joshi. Thank you Kunjan! 😊