What is the definition of consequential loss in insurance terms?

What is the definition of consequential loss in insurance terms?

• A. The same as direct loss
• B. The same as indirect loss
• C. An unexpected financial gain
• D. A loss that occurs due to a preceding event

Answer: (B)

Consequential loss in insurance terms refers to a loss that occurs as a result of a preceding event, typically as a consequence of direct damage to property or an incident. This type of loss is often indirect and is not immediately connected to the primary event, such as loss of income when a business cannot operate due to property damage. It captures the broader financial impact that follows an initial loss, distinguishing it from direct loss which refers to the immediate damage to the property itself. Understanding consequential loss is crucial for businesses as it affects not only the property damage costs but also the potential long-term financial implications following an adverse event.

Consequential loss in insurance terms refers to a loss that occurs as a result of a preceding event, typically as a consequence of direct damage to property or an incident. This type of loss is often indirect and is not immediately connected to the primary event, such as loss of income when a business cannot operate due to property damage. It captures the broader financial impact that follows an initial loss, distinguishing it from direct loss which refers to the immediate damage to the property itself. Understanding consequential loss is crucial for businesses as it affects not only the property damage costs but also the potential long-term financial implications following an adverse event.