A consequential loss is an indirect adverse impact caused by damage to business property or equipment. A business owner may purchase insurance to cover any damage to property and equipment, and may also obtain coverage for secondary losses.

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.

Who is liable for consequential damages?

If the project is not completed on time, the owner will lose the benefit of that revenue and the contractor and responsible subcontractors can face liability for that loss of revenue, i.e., consequential damages.