Which is an example of a consequential or indirect loss?

Indirect losses that are the result of physical damage and adversely affect normal business operations may be considered consequential losses. Coverage of consequential losses may include compensation for ongoing obligations such as salaries and fixed operational expenses.

What is an example of 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 the difference between a direct loss and an 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 are direct losses and indirect losses?

Limb 1: damages that arise naturally from the breach, in the ordinary course of things (direct losses). Limb 2: damages that may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, arising as the probable result of the breach (indirect or consequential losses).

How do you explain a consequential loss?

A breach of a contract will likely result in a loss for one or all parties to the contract. The loss in a contract which both parties reasonably foresee at the time they enter into the contract is called consequential loss and is typically limited or excluded from liability in the contract.

What is a indirect loss?

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 is meant by indirect loss?

Indirect or consequential loss (second limb) is a loss which arises from particular and unusual circumstances that the parties knew or should have known about at the time the contract was entered in to, and do not flow naturally from the breach.

What is direct physical loss?

California provides a clear and concise definition of “direct physical loss.” A direct physical loss occurs when a “change in insured property [that was originally] in a satisfactory state,” is damaged by an accident or other fortuitous event which causes the property to become “unsatisfactory for future use absent …

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 are examples of consequential damages?

Examples of Consequential Damages.

• Loss of anticipated profits;
• Loss of business;
• Cost of unsuccessful attempts to repair defective goods;
• Loss of goodwill;
• Losses resulting from interruption of buyer’s production process;
• Loss of reputation; and.
• Loss of sales contracts because of delayed products.

Is loss of profit an indirect loss?

No, the starting point is that a loss of profit may be either a direct or indirect loss. Whether the loss is direct or indirect will depend on the facts of each case. It will be a direct loss if, at the time the contract was entered into, it was likely to result from the breach in question.

What is the difference between direct and indirect destruction?

Direct losses refer to the physical or structural impact caused by the disaster such as the destruction of infrastructure caused by the force of high winds, flooding or ground shaking. Indirect effects are the subsequent or secondary results of the initial destruction, such as business interruption losses.

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