In its most basic terms, consequential loss is the basic value of loss, specifically when it relates to the loss of a property's use. A good example of this loss would be when a fire damages a building's structure and causes the businesses in that structure to lose income until it is finally able to reopen after renovations and repairs. This particular loss mainly focuses on the loss of the income, so when you have to close your restaurant to deal with a kitchen fire, there are losses in customer revenue that you have.
Also, in many ways, consequential loss is covered as basically being indirect damage or loss from something else, a peril that is covered in your policy. So, items such as windstorms or fire may not have directly destroyed your freezer, but if the power is cut off because of the fire or strong winds and the food spoils, you can recover money for the loss of that food. Just make sure that you are specifically covered for consequential loss.
In the case of most insurance policies, consequential loss is not frequently covered in the policy, so for many businesses, the only way to be covered for it is to have Business Interruption Insurance. Basically, this is insurance granted when your business, for whatever reason, has to terminate services and this results in a loss of your profits, as well as the fact that your fixed expenses continue. This can be a wonderful way to protect your businesses from fires, electrical outages, and other issues that may cause your business to stop for an extended period of time while you enact repairs. When looking at Business Interruption Insurance, there are several different forms that you can have for your business. There is Contingent Business Interruption, Gross Earnings, Extra Expense, Profits and Commissions and finally Tuition. The Tuition form has, for the most part, been now replaced by the more general Business Income Coverage form, but each of these different forms focuses on a different kind of loss recovery for businesses.
In some situations, if someone breaches their contract with a business, or shows negligence that winds up costing the business money, time and possibly even shuts things down, then it can be considered consequential loss and therefore it can be covered under insurance policies, or could be sued for. The best way to make sure that you are going to get what you need out of your policy is to make sure, first of all, that consequential loss is covered in your form. Then, when you do need to make a claim, make sure that you spend the time to hire someone to help you when the loss adjuster is brought in by the insurance company. With businesses, it is especially important that you plan and prepare for when the loss adjuster arrives so that you can get the maximum return that you will need on your policy. Wages and revenue lost can mean the difference between a restaurant reopening or simply folding, so it is important to take a personal interest and to care about the help you find.
