What is the term for indirect loss, such as staying in a hotel after a fire?

Consequential loss refers to indirect losses that occur as a result of a primary event. In the context of staying in a hotel after a fire, the fire itself is the primary event that causes damage to one’s property. The cost of lodging while finding a temporary place to live represents an additional expense incurred due to that event, rather than a direct loss of property. This type of loss is not related to the physical property that was damaged, but instead reflects the financial impact that stems from the circumstances created by that damage.

Consequential losses typically encompass expenses such as temporary housing, loss of income from being unable to operate a business, or other indirect costs directly attributable to the initial incident. Understanding this distinction is essential in insurance terms, as coverage for consequential losses may differ from coverage for direct losses.