What type of loss is defined as a loss occurring suddenly due to a covered peril?

A direct loss is a term used in insurance to describe a loss that occurs suddenly due to a specific event or hazard that is covered under an insurance policy. This type of loss is typically tangible and can be directly traced back to a peril, such as fire, theft, or vandalism. For instance, if a fire damages a building, the cost to repair that building is considered a direct loss.

In contrast, indirect losses refer to losses that arise as a result of a direct loss. They can include additional expenses or lost income that occur following the initial event. Consequential losses are similar, representing financial repercussions that result from direct losses, such as the loss of business revenue while a property is being repaired. Delayed losses are not standard terms in insurance and do not represent a specific kind of loss recognized in property and casualty insurance.

By understanding the nuances of these definitions, one can see why direct loss accurately describes a situation where the loss occurs suddenly because of a covered peril, capturing the essence of immediate and tangible damages.