Conclusion

The most affected businesses resulted from the chemical spill are the eateries and storefronts.  Consequential loss is based on the interruption loss; which consist of three cost:

•  Loss of future profit due to reduced sales
• Financial loss due to continuation of fixed costs at pre-fire damaged level.
•   Additional expenses to maintain sales during interruption period.

From this case of chemical oil spill, the most relevant flow of interruption losses in respective to Adelphia Sports Bar & Grille can be illustrated with:

And the impacts to the company are:

• The increase in additional expenses/ increased cost of working as well as standing charges in order to supply bottled water for patrons and changing filters in soda and ice machines, respectively by Adelphia Sports Bar & Grille.
• 300,000 people without safe drinking water for four to 10 days
•   Increased cost of working of $10,000 by Italian restaurant Fazio’s over four months in extra bottled water and ice.

Why this case is considered to be under the Consequential Loss Insurance policy whereby the chemical spill has caused indirect damage to the business. Due to the contamination of water supply from Elk River, eateries such as Adelphia Sports Bar & Grille and Fazio’s have suffered reduction in sales therefore causing loss in future profits.

However, according to doctrine of proximate cause insurer is only liable for a loss proximately caused by insured peril. As well as in reference to Material Damage Proviso (MDP), at the happening of the loss, there must be in force as insurance covering the interest of business in the property. Meaning to say, Consequential Loss Insurance goes parallel with Fire Insurance.