Which is an example of a consequential or indirect loss?

Which is an example of a consequential or indirect loss?

• A. Damage to property
• B. Loss of rental income due to property damage
• C. Medical expenses incurred
• D. Loss of personal belongings

Answer: (B)

Consequential or indirect loss refers to secondary losses that occur as a result of a primary loss. In this context, loss of rental income due to property damage is a classic example of consequential loss. When a property is damaged, not only are the physical repairs necessary, but the ability to generate rental income is also impacted. The inability to rent out the property leads to a loss of income that is a consequence of the initial property damage. In contrast, damage to property itself is considered a direct loss because it involves the immediate, tangible harm to the asset. Similarly, medical expenses and loss of personal belongings are also direct losses incurred from events such as accidents or theft. They result in immediate, identifiable costs that are directly tied to the loss event rather than arising as a secondary effect.

Consequential or indirect loss refers to secondary losses that occur as a result of a primary loss. In this context, loss of rental income due to property damage is a classic example of consequential loss. When a property is damaged, not only are the physical repairs necessary, but the ability to generate rental income is also impacted. The inability to rent out the property leads to a loss of income that is a consequence of the initial property damage.

In contrast, damage to property itself is considered a direct loss because it involves the immediate, tangible harm to the asset. Similarly, medical expenses and loss of personal belongings are also direct losses incurred from events such as accidents or theft. They result in immediate, identifiable costs that are directly tied to the loss event rather than arising as a secondary effect.