Think of it as a ripple effect. Consequential damages to common areas and unit owners’ property in a condominium complex that result from a subcontractor’s defective work constitute both “property damage” and an “occurrence” pursuant to the plain meaning interpretation of the terms as defined in the Insurance Services Office, Inc.’s (ISO) 1986 standard CGL form. A consequential loss is an indirect adverse impact caused by damage to business property or equipment. What is consequential damage? However, it does seem that there is a movement to cover some of these losses. This is one of a series of articles originally published in Mealey’s Litigation Report: Insurance Bad Faith, Vol. Tiffany Tower filed suit for breach of contract and for consequential damages for breach of the implied covenant of good faith and fair dealing. This may vary under non-ISO forms and some states have laws that govern "mismatched" repaired property. Scott C. Turner, Insurance Coverage of Construction Disputes § 6:22 (2d ed.). Umbrella policies can cover what primary insurance excludes and/or additional coverage beyond the limits set in your other insurance. A: Assuming an ISO HO policy, the policy only covers DIRECT damage to property, not indirect or consequential damage such as a loss in market value due to the appearance of a mix of new and old siding after the repair. Consequential damage is included under comprehensive cover and is damage resulting from other damage. Insurance policies do exist to cover consequential losses however. (6) The purpose of consequential damages is to place the insured in the position that it would have been in had the insurance contract been performed. It is merely a straightforward application of the common law doctrine of consequential damages. The notion that the insurance company should have to pay the fees associated with properly adjusting an insured loss is not a new idea. The few courts that have upheld denials of coverage for consequential damages have … For example, if a tornado damages a flower shop, the owners would most likely lose revenue due to the fact that the building needs repairs. Consequential losses can result in substantial amounts of lost revenue. For example, if a car’s fan blade breaks off and damages the radiator to such an extent that the engine overheats, the damage to the radiator and engine is consequential damage. Consequential damages is defined by the Pattern Jury Charge as: However, the policy doesn’t cover the consequential loss/expense of replacing the entire roof since the remaining shingles have not been damaged by other than normal wear and tear which is excluded elsewhere in the policy. This means that you’re found at fault or negligent for someone else’s injury or damage. 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