What is the difference between direct loss and indirect or consequential loss?

In assessing damages for breach of contract: Consequential loss (also known as indirect loss) arises from a special circumstance of the case, not in the usual course of things. Direct loss is the natural result of the breach in the usual course of things.

What is the difference between direct and indirect loss in insurance?

Indirect losses, (“consequential losses” in business insurance policies) are not inflicted by the peril itself but describe losses suffered as a result or consequence of the direct loss.

Which is an example of a consequential or indirect loss?

Consequential loss coverage reimburses the insured for business costs due to damaged facilities or equipment. For example, business interruption insurance can cover situations that result when the loss of revenue occurs due to events such as an extended power outage, a flood, or a mudslide.

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.

What is a direct loss example?

Direct Loss Example If a tornado strikes a town and takes the roof off the building, a direct loss would include damage to the structure, as well as to equipment, furniture, inventory or other items inside. Fire and smoke damage would count as a direct loss. So would theft, or a car crashing through the front window.

What is an indirect loss in insurance?

A loss or damage that results from an insured’s inability to use his/her property because of direct loss to the property of others.

What are examples of a direct loss in insurance?

In insurance, “direct loss” refers to damage immediately inflicted by a disaster, accident or other event, known in insurance language as “perils.” If a tornado strikes your town and takes the roof off your building, your direct loss would include damage to the structure, as well as to equipment, furniture, inventory …

What is an example of an indirect loss?

Indirect Loss Insurance Example If a tornado destroys the roof of a store, not only are there rebuilding costs, but the business cannot operate until the damage is fixed. Income lost during the rebuilding — and after it, if customers stick with the alternatives they find in the meantime — represents an indirect loss.

What is consequential loss example?

Till the owner purchases a new set of machinery, the operations will remain halted. This loss due to the halting of daily business operations is an example of consequential loss as it is an indirect loss. It is not covered under the insurance for direct losses.

What is an example of direct damages?

Direct Damages means actual, direct damages incurred by the claiming party which include, by way of example (a) erroneous payments made by PROVIDER or CUSTOMER as a result of a failure by PROVIDER to perform its obligations under an MOA or PSA, (b) the costs to correct any deficiencies in the Services, (c) the costs …

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