Chapter 4 Fifty Shades of Law


Financial Loss – What is it and when is it covered?


You are probably wondering; “why should I be interested in knowing how the law and insurers view financial loss”?


For most of your daily life you are probably correct; but when it comes to covering your business against risk or understanding the risk to your business then, yes, it is important to understand how the law and insurers view financial loss and particularly at a time when “financial loss” cover is increasingly given as an extension to liability policies.


As this area of law and insurance is extensive, we are going to tackle the subject over a few IIMS magazine publications – so keep scanning the IIMS publication for our article!!


Well let’s start with “what is it”!


English law divides situations into two: • situations where there has been physical injury or damage, and


• situations where there has not. “financial loss” as understood by insurers exists only in the second situation.


76 | The Report • June 2019 • Issue 88


Hence, the way the law changes, and the insuring of “financial loss”, are intimately bound up with each other.


It is in the law of tort that most of the legal changes have taken place, particularly the tort of negligence and we will “take a look” at these changes and how the two main strands have developed: • physical injury or damage cases rely on the case of Donoghue v Stevenson


• special relationship cases rely on judgement in Hedley Byrne case


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