Oakleafe Claims - Logo
Oakleafe Claims

Consequential Loss: A Comprehensive Guide to Insurance Jargon

claims, Insurance Claim Management, Insurance Claims, Insurance Company, Insurance Loss Assessors, Loss Adjuster, Loss Assessor

When navigating the complex terrain of insurance, one of the most convoluted terms frequently surfaces is 'Consequential Loss'. This often-misunderstood insurance jargon can lead to confusion and have significant implications on claims, making it essential for policyholders to understand its meaning thoroughly. In this article, we'll clear the fog around this term and demystify what it truly signifies in the insurance landscape.

What is Consequential Loss?

Let's break it down. 'Consequential Loss' refers to financial loss suffered due to a specific insured event, which is not directly caused by the event itself, but due to the consequence or aftereffect of the event. It is an indirect loss which extends beyond the immediate damage or destruction caused by an insured risk.

Consequential Losses are also commonly known as 'Business Interruption Insurance' in the commercial insurance realm, as it specifically covers the loss of income that a business suffers post-disaster. The insurance can also cover operating expenses, like electricity, that continue even though business activities have temporarily stopped.

How does Consequential Loss work?

In the world of insurance, where 'cover' is king, understanding how consequential loss functions in a real-world context can be highly beneficial.

For example, imagine you own a seaside restaurant in Cornwall, and your business is insured against various risks, including storm damage. One day, a severe storm hits, damaging your property extensively. Not only is your physical property damaged, but your business also has to close for repairs, meaning you're losing potential income each day you remain shut.

In this case, the direct loss is the damage caused by the storm to your property, which would likely be covered under your standard property insurance policy. The consequential loss is the loss of income due to the interruption of your business while the property undergoes repairs. This loss, being indirect, isn't covered by a standard property insurance policy, but could be covered if you have consequential loss or business interruption insurance.

Understanding the Meaning of Consequential Loss Cover

As we’ve seen, consequential loss is a vital consideration for businesses, especially those that depend on physical premises. Its impact can be significantly damaging, as not only does the company have to bear the direct damage cost, but it also suffers from an interruption in its income stream.

Therefore, while obtaining a comprehensive insurance policy, it's crucial to understand what your policy covers and what it doesn't. Always ensure you’re aware of whether consequential loss is included or not.

This is where a broker can be instrumental. They can help guide you through the intricate landscape of insurance terms and conditions, ensuring you have the coverage you need to protect your business, come what may.

Concluding Thoughts

In the end, understanding insurance terms like 'Consequential Loss' can help businesses better prepare for unforeseen circumstances, providing a safety net for both direct damages and indirect loss.

In an increasingly unpredictable world, we encourage businesses to seek advice from insurance professionals to ensure they have the right cover. It’s always better to be safe than sorry, after all.

We hope this article has illuminated the path in the quest to navigate the insurance labyrinth. Stay tuned for more insights into the world of insurance jargon. Because knowledge isn't just power - it's peace of mind.

In the unfortunate event you are affected and need to make an Insurance Claim it is advisable to engage with a Loss Assessor such as Oakleafe Claims, who will handle your Claim ensuring you stay in control and that you receive you full entitlement.

Related Claims and Topics
September 26, 2023
How Safe Is Your Home...Our Top Tips

How safe is your home? We have put together our top tips to help you ensure you have the best prevention steps in place to protect your home, these may also help you reduce your Insurance premium too. 1. Be Mindful with Social Media Be careful about broadcasting your whereabouts on social media as it […]

Read More
September 21, 2023
How Soon Can You Claim on Home Insurance?

In the realm of home insurance, one question frequently asked is "how soon can you claim on contents insurance?" Knowing the timeframe for making a claim is crucial, especially when dealing with loss, damage, or even flood, fire and theft. This blog aims to provide a comprehensive overview, covering all aspects from the time limit […]

Read More
September 11, 2023
Reinstatement Costs: What are they?

Understanding the correct insurance terms and amounts is crucial when it comes to buildings insurance. One term that often surfaces is the 'reinstatement cost'. But what exactly does this entail? What Are Reinstatement Costs? In simple terms, reinstatement costs refer to the total cost required to rebuild your home or property to its pre-loss or […]

Read More


If you have been declined whilst trying to claim on your domestic or commercial insurance, we can help. We can also help with professional services, for example, Brokers, VAR Valuations and Managing Agents.