What type of loss is categorized as a consequence resulting from a direct loss?

An indirect loss is classified as a consequence that arises from a direct loss. When a direct loss occurs, such as damage to a property due to a fire, it often leads to additional costs or hardships, which are referred to as indirect losses. These can include things like loss of income because a business cannot operate, or increased expenses due to temporary housing arrangements after a home becomes uninhabitable.

Understanding the distinction between indirect and direct losses is crucial in the context of insurance. Direct losses relate specifically to the physical damage or loss of property, while indirect losses emerge as a downstream effect of that primary incident, impacting the policyholder in further ways. This concept is vital for claims handling and determining the extent of coverage needed in a comprehensive insurance policy.