Consequential Loss

Consequential loss may refer to economic loss caused by damage to property or other losses suffered due to a breach of contract. Consequential loss is typically defined as “losses which are the indirect or consequential result of a breach of contract or negligence, or any other cause, such as loss of profits, loss of use, or other financial losses.” This type of financial loss is considered to be indirect and is usually not covered under a standard insurance policy.

Consequential losses can be challenging to calculate and prove as they are not directly caused by the incident that triggered the claim. For example, a company may suffer a consequential loss due to a supplier not delivering the goods on time, causing the company to miss out on a lucrative opportunity. In this case, the company may be able to claim for the consequential losses but must demonstrate that the incident caused the loss.

Individuals and organizations must be aware of the risks of consequential losses. In some cases, businesses may be able to take out insurance to cover the costs of consequential losses, but this is not always the case. It is essential to understand the terms and conditions of any policy before taking out insurance and to ensure that the policy covers all potential losses.

In summary, a consequential loss may refer to a type of economic loss caused by damage to property or other losses suffered due to a breach of contract. This type of financial loss is considered indirect, usually not covered under a standard insurance policy, and can be difficult to calculate and prove. It is essential to be aware of the risks of consequential losses and consider taking out insurance to cover any potential losses.