Consequential Loss

Financial loss occurring as the consequence of some other loss, often called an indirect loss. Consequential loss or damage is indirect loss or damage resulting from loss or damage caused by a covered peril, such as fire or windstorm. In the case of loss caused where windstorm is a covered peril, if a tree is blown down and cuts electricity used to power a freezer and the food in the freezer spoils, if the insurance policy extends coverage for consequential loss or damage then the food spoilage would be a covered loss. Business Interruption Insurance, extends consequential loss or damage coverage for such items as extra expenses, rental value, profits and commissions, etc.