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Simple English definitions for legal terms
consequential loss
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A quick definition of consequential loss:
Consequential loss is a type of loss that happens because of damage, rather than the damage itself. For example, if a flood damages a house, the consequential loss could be the cost of temporary housing while the house is being repaired. This type of loss is different from direct loss, which happens immediately because of an event. Consequential loss can be proximate, meaning it's a natural and probable effect of the damage, or remote, meaning it's not a direct result of the damage.
A more thorough explanation:
Consequential loss is a type of loss that arises from the results of damage rather than from the damage itself. It is also known as an indirect loss or consequential injury. This type of loss is different from direct loss, which results immediately and proximately from an event.
- If a factory is damaged by a fire, the direct loss would be the cost of repairing or replacing the damaged property. However, the consequential loss would be the loss of income from the factory being out of operation during the repair period.
- If a car is damaged in an accident, the direct loss would be the cost of repairing or replacing the car. However, the consequential loss would be the loss of use of the car during the repair period.
These examples illustrate how consequential loss is a result of the damage rather than the damage itself. It is important to consider both direct and consequential losses when assessing the impact of an event or risk.