A consequential loss is an indirect adverse impact caused by damage to business property or equipment. … A consequential loss policy or clause will compensate the owner for this lost business income. This type of insurance is also called business interruption or business income insurance.
What does consequently mean in a sentence? consequently synonym.

What is a consequential loss example?

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 consequential losses in insurance?

Any interruption in business operations caused by fire or other special perils, resulting in a financial loss of various kinds is called consequential loss. A consequential loss insurance policy for fire or other special perils financially compensates the owner for the lost business income due to fire.

Can you insure against consequential loss?

Consequential losses are traditionally covered by a separate type of insurance called Business Interruption insurance (sometimes also called Consequential Loss insurance).

What is the difference between direct loss and consequential loss?

In assessing damages for breach of contract: Consequential loss (also known as indirect loss) arises from a special circumstance of the case, not in the usual course of things. … Direct loss is the natural result of the breach in the usual course of things.

How do you explain a consequential loss?

Generally, consequential loss (also called indirect loss) is the non-dominant loss from a breach of contract. They are probable consequences or losses contemplated by the parties at contract formation. In contrast, normal loss (or direct loss) naturally arises from a breach.

What are consequential losses?

A consequential loss is an indirect adverse impact caused by damage to business property or equipment. … A consequential loss policy or clause will compensate the owner for this lost business income. This type of insurance is also called business interruption or business income insurance.

Can you exclude consequential loss?

The reason for wishing to exclude liability for “indirect or consequential” losses is that these losses may be unpredictably large, or open-ended, representing an “unquantifiable risk”. There is no standard wording of exclusion clause for “indirect or consequential” losses.

What is a consequential loss provide examples of the sources of consequential losses?

A consequential loss is a loss sustained by a business when it is unable to use its assets in the intended manner. A consequential loss typically arises as the result of damage caused by a natural disaster, such as flooding, a tornado, or an earthquake.

How would you determine the amount of claim for consequential loss?

The sum produced by adding to the Net Profit the amount of the Insured Standing Charges, or if there be no Net Profit the amount of the Insured Standing Charges less such a proportion of any net trading loss as the amount of the Insured Standing Charges bears to all the standing charges of the business.

Is consequential economic loss recoverable?

Common categories of pure economic loss are expenditure, loss of profit, profitability or loss of some other form of financial gain. It is therefore important to determine whether a claim is in fact consequential or pure economic loss, as the latter is usually not recoverable in law as damages.

Are consequential damages direct damages?

Consequential damages are not direct damages but are damages that necessarily arise from the specific nature of the breach of contract.

Are consequential damages recoverable?

Also called special damages, since they result from a breach of contract and yet would not necessarily be incurred by every injured party experiencing that breach. Consequential damages are generally not recoverable in contract disputes, but are recoverable in tort. See General damages (contrast).

When can you claim consequential loss?

A breach of a contract will likely result in a loss for one or all parties to the contract. The loss in a contract which both parties reasonably foresee at the time they enter into the contract is called consequential loss and is typically limited or excluded from liability in the contract.

Why is consequential loss excluded?

To some, this may mean the exclusion of claims: primarily, for loss of profit and/or loss of revenue; for losses that it was not reasonable for a party to be aware of when they entered into a contract; for losses that arise from the way in which the counterparty conducts its business and/or.

What is the difference between incidental damages and consequential damages?

The difference between incidental and consequential damages is the cause of the expense or loss. Incidental damages are the direct result of one party’s breach of contract. Consequential damages are more indirect, being incurred not as a result of the breach itself, but due to the end result of the breach.

What is special 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.

What does consequential loss fire policy covers?

Consequential Loss (Fire) Insurance Policy The Consequential Loss (fire) policy covers Loss of Gross Profit and/or increase in cost of working due to reduction in turnover/output.

What is the difference between consequential economic loss and pure economic loss?

Economic loss is then divided into “consequential economic loss” – that which arises directly from some physical damage or injury (e.g. loss of earnings from having your arm cut off) and “pure economic loss”, which is everything else. … The physical injury is caused to the deceased, not the family.

What is consequential economic loss in tort?

A financial loss that is a direct result of personal injury or property damage caused in negligence.

What is an example of an economic loss?

Examples of pure economic loss include the following: Loss of income suffered by a family whose principal earner dies in an accident. The physical injury is caused to the deceased, not the family. Loss of market value of a property owing to the inadequate specifications of foundations by an architect.

Are consequential damages compensatory?

Consequential damages (also known as special damages) are another form of compensatory damages. Special damages do not flow directly and immediately from the defendant’s act, but from some of the consequences of the act.

What are consequential damages in a lawsuit?

Consequential damages, otherwise known as special damages, are damages that can be proven to have occurred because of the failure of one party to meet a contractual obligation, a breach of contract.

Are consequential damages foreseeable?

But consequential damages—which are collateral to the breach—are also recoverable even though they were not reasonably foreseeable at the time of contract formation so long as they were actually foreseeable to the breaching party due to special circumstances peculiar to that transaction.

Should I waive consequential damages?

Because the waiver of consequential damages can significantly control the amount of damages for which a contractor is assuming risk and greatly limit the owner’s ability to recoup many damages, it is arguably the most important provision in a construction contract.

What can you recover from consequential damages?

Modern Day Consequential Damages The non-breaching party is entitled to recover all damages sustained to place the non-breaching party in a position where the party would have been had there been no breach of contract.

What is consequential loss in Australia?

The words ”consequential loss” were taken to mean losses that “may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it” (commonly referred to as the ‘second limb of Hadley v. Baxendale’).