Consequential Loss or Damage

Consequential loss or damage — as opposed to direct 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 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.