Consequential Loss

The amount of loss incurred as a result of being unable to use business property or equipment. If the property/equipment is damaged through a natural disaster or accident, only certain types of insurance can cover the owner for lost business income.

Consequential loss is considered an indirect loss (as compared to losses from the direct damage). Direct damages would be covered under different types of insurance, such as property/casual or fire insurance, but the firm still incurs the costs of lost operations.

Say, for example, that a major storm causes some property damage to a storefront. The business owner’s property/casualty insurance may cover the amount needed to replace the property, but what about the lost revenue while the store is closed? All of the owner's fixed costs such as rent continue, but there's no money coming in. These are consequential losses, and can be covered under business interruption insurance, of which there are several types.

Insurance to compensate for consequential losses can also cover situations where no direct damage is done to property, but loss of revenue occurs because of things like a power outage or breach of contract from a supplier or business partner.

Investment dictionary. . 2012.

Look at other dictionaries:

  • consequential loss — see loss Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. consequential loss …   Law dictionary

  • consequential loss — ➔ loss * * * consequential loss UK US noun [C or U] ► LAW, INSURANCE a loss of money that happens as a result of something wrong or illegal that someone else has done: »We suffered a consequential loss as a result of the non delivery of these… …   Financial and business terms

  • consequential loss — /ˌkɒnsɪkwenʃəl lɒs/ noun loss which occurs as the result of some other loss. Also called indirect loss …   Dictionary of banking and finance

  • consequential loss — noun : an indirect or secondary loss occasioned by direct property loss (as that caused by a fire) and often provided for by special provisions in insurance policies or by special policies (as rent insurance or business interruption insurance) …   Useful english dictionary

  • consequential loss — Losses not directly caused by damage, but rather arising from results of such damage …   Black's law dictionary

  • consequential-loss policy — See business interruption policy …   Big dictionary of business and management

  • consequential loss insurance — noun an insurance policy indemnifying against contingent results of accident, especially the cost of the hire of a car to replace one under repair or the cost of alternative accommodation after a fire …   Australian English dictionary

  • consequential loss policy — Fin see business interruption insurance …   The ultimate business dictionary

  • loss — n 1: physical, emotional, or esp. economic harm or damage sustained: as a: decrease in value, capital, or amount compare gain b: an amount by which the cost of something (as goods or services) exceeds the selling price compare …   Law dictionary

  • loss — is a generic and relative term. It signifies the act of losing or the thing lost; it is not a word of limited, hard and fast meaning and has been held synonymous with, or equivalent to, damage , damages , deprivation , detriment , injury , and… …   Black's law dictionary

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