What is an consequential loss in insurance

Consequential Loss — a loss that arises as a result of direct damage to property—for example, loss of rent. Some types of consequential loss are insurable under standard direct damage or time element coverage forms; others are not.

What is the difference between actual loss and consequential loss?

By definition, therefore, consequential losses are exceptional and often not recoverable. Direct loss is the natural result of the breach in the usual course of things. Most foreseeable kinds of loss are direct, including financial losses such as loss of profits and loss of business or goodwill.

What are the losses covered under consequential loss policy?

Indirect losses that are the result of physical damage and adversely affect normal business operations may be considered consequential losses. Coverage of consequential losses may include compensation for ongoing obligations such as salaries and fixed operational expenses.

What is consequential insurance?

Consequential loss insurance policies diminish indirect risks that arise from a situation and are typically offered in combination with regular business or property insurance. Consequential loss is considered an indirect loss, as opposed to a loss from a natural disaster or accident.

What is indirect or consequential loss?

Indirect or consequential loss (second limb) is a loss which arises from particular and unusual circumstances that the parties knew or should have known about at the time the contract was entered in to, and do not flow naturally from the breach.