Contingent Dependent Properties Insurance: Understanding the Basics - Including Direct Versus Indirect Losses

ADJUSTING TODAY

Contingent Dependent Properties Insurance: Understanding the Basics — Including Direct Versus Indirect Losses

By Donald S. Malecki, CPCU

Adjusters International Disaster Recovery Consulting

E-Edition

Whether it’s to supply raw materials or component parts, or buy their products or services, most companies depend on other organizations to operate successfully. This is particularly felt when a key supplier or customer sustains a property loss and the company’s operations are so specialized that it is very difficult, time-consuming or even impossible to find substitutes. That supplier or customer could be the company’s only viable option.

FROM THE EDITOR

The answer to—which is more important to a company’s success, those whomake its products possible or those who buy them — is obvious: both are indispensable to the firm’s operations.

Less obvious, however, is how the companywould fare — or even survive — if neither contributed in their normal fashion. Losses that disrupt suppliers or customers can be devastating to the company that depends on them.

Fortunately, protection against such risk is available in the formof contingent business income coverage, specifically, contingent dependent properties insurance. In this issue of Adjusting Today, expert DonaldMalecki reviews the basics of this often overlooked and inadequately understood coverage, including the nuances of direct and indirect losses.

This was one of the final articles prepared by Mr. Malecki before his untimely passing in 2014. One of the most respected insurance authors of our era, and a regular contributor to Adjusting Today, his timeless understanding of complex insurance subjects and ability to communicate about themhave enlightened countless business managers and helped thembetter protect their companies as a result.

This article continues that tradition.

Sheila E. Salvatore Editor


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