Consequential Damage

What is Consequential Damage?

Consequential damage, also known as indirect or special damage, refers to the additional losses that occur as a result of a primary event. In the context of home warranties, this primary event is typically the failure of a covered appliance or system.

For instance, if your refrigerator breaks down and the food inside spoils, the cost of replacing the spoiled food would be considered consequential damage. Similarly, if a plumbing leak damages your hardwood floors, the cost of repairing the floors would be consequential damage. These are indirect losses that occurred as a result of the primary event, i.e., the malfunctioning appliance or system.

Types of Consequential Damage

Consequential damage can be categorized into two main types: financial and non-financial. Financial consequential damage refers to the monetary losses that occur as a result of the primary event. This could include the cost of replacing spoiled food, repairing damaged floors, or even the loss of income if you had to take time off work to deal with the issue.

 

Non-financial consequential damage, on the other hand, refers to the non-monetary losses that occur as a result of the primary event. This could include the inconvenience and stress of dealing with a broken appliance, the disruption to your daily routine, or even the emotional distress caused by the event.

Consequential Damage and Home Warranties

How consequential damage is handled in a home warranty plan can greatly impact the coverage and benefits of the plan. Some home warranty providers may cover consequential damage, while others may not. This is often a key point of consideration for homeowners when selecting a home warranty plan.

Terms and Conditions

Home warranty providers often have specific terms and conditions related to consequential damage. These terms and conditions can dictate what types of consequential damage are covered, the extent of coverage, and the process for claiming consequential damage.

 

For example, some providers may only cover financial consequential damage and not non-financial consequential damage. Others may have a cap on the amount they will pay for consequential damage. Some providers may require you to provide proof of the consequential damage, such as receipts for the spoiled food or a letter from your employer confirming your loss of income.

Exclusions

It's also important to note that not all types of consequential damage may be covered by a home warranty plan. Certain types of consequential damage may be excluded from coverage. These exclusions can vary from one provider to another, but they often include consequential damage caused by natural disasters, acts of God, or intentional damage.

 

For example, if your refrigerator breaks down due to a power surge caused by a lightning strike, the cost of replacing the spoiled food may not be covered by your home warranty plan. Similarly, if your plumbing leaks due to intentional damage, the cost of repairing the damaged floors may not be covered.