Trustees and owners often confuse resultant damage and consequential loss. The difference matters because one may be covered in certain circumstances while the other may be excluded or limited.
What is resultant damage?
Resultant damage is damage that results from an insured event. For example, if a geyser bursts and the escaping water damages ceilings, cupboards or flooring, that water damage may be resultant damage.
What is consequential loss?
Consequential loss is an indirect financial loss that flows from the event, such as loss of income, inconvenience, business interruption or alternative accommodation costs. These losses are often excluded or only covered in specific limited ways.
Geyser example
If a geyser bursts, the policy may treat the geyser, the water damage and any related financial losses differently. The geyser replacement may have a limit and excess. The water damage may be a separate claim section. Indirect financial losses may not be covered unless specifically provided for.
Why trustees should explain this carefully
Owners may assume that because the policy covers the event, every related cost is automatically covered. That is not always correct. Trustees should explain that cover depends on policy wording, limits and exclusions.
Documents that help
- Photos of the source and damage.
- Plumber or contractor report.
- Separate quotes for source repair and resulting damage.
- Details of any accommodation or income loss claim.
- Policy schedule and wording.
Common questions
Is water damage from a geyser resultant damage?
It can be, depending on the cause and policy wording.
Is inconvenience covered?
Usually not unless the policy specifically provides for a relevant benefit.
Can loss of rent be covered?
Some policies may include limited cover for loss of rent or alternative accommodation after certain insured events, but the wording must be checked.