In a boiler and machinery policy, what does consequential damage refer to?

Consequential damage in the context of a boiler and machinery policy refers to financial losses that occur as a result of an event impacting operations, specifically business interruption. This type of coverage addresses the economic fallout that can arise when machinery or equipment fails, leading to a halt in production or services. For instance, if a boiler fails and prevents a manufacturer from completing orders, the resulting loss of income during the downtime falls under consequential damage.

While direct damage to equipment, negligence-related losses, and injuries caused by machinery are all significant risk factors and often covered under various insurance policies, they do not align with the concept of consequential damage. Consequential damage specifically encompasses the broader implications of an incident, particularly focusing on how the interruption to operations leads to revenue loss, rather than the physical damage to the equipment itself.