Which of the following best describes consequential loss?

Consequential loss refers to the indirect loss that occurs as a result of a direct loss. This type of loss often encompasses the secondary effects stemming from an initial event, such as lost profits or additional expenses incurred due to business interruption after a physical loss, like fire or damage to property.

In this context, option B accurately captures the essence of consequential loss, highlighting its relationship to a direct loss. For example, if a business suffers a fire that damages its building and inventory, the direct loss is the damage to the property. However, the consequential loss might include the income that the business could not earn while it was closed for repairs or the extra costs it had to pay to rent temporary facilities.

The other options do not encompass the concept of consequential loss as clearly. Loss or damage to the property itself refers to direct loss, legal responsibility pertains to liability, and risk of theft or vandalism generally describes potential threats rather than the aftermath effects of a direct loss.