Phase-field or gradient-damage approaches offer elegant ways to model cracks. Material stiffness decreases in the cracked region with the evolution of the phase-field or damage variable. This variable and, consequently, the decreased stiffness are spatially diffused, which essentially means the loss of the internal links and the bearing capacity of the material in a finite region. Considering the loss of material stiffness without the loss of inertial mass seems to be an incomplete idea when dynamic fracture is considered. Loss of the inertial mass in the damaged material region may have a significant effect on dynamic failure processes. In the present work, dynamic fracture is analyzed using a theory, which takes into account the local loss of both material stiffness and inertia. Numerical formulation for brittle fracture at large deformations is based on the Cosserat point method. Based on the developed algorithm, the effect of material inertia around a crack tip is studied. We consider a mode-I crack under dynamic loading. Results suggest that in dynamic fracture localized loss of mass plays an important role at the crack tip. It is found, particularly, that the loss of inertia leads to lower stresses at the crack tip and narrower cracks as compared to the case when no inertia loss is considered. It is also found that the regularized problem formulation provides global convergence in energy under the mesh refinement. At the same time, the local crack pattern might still depend on the geometry of the unstructured mesh.