When is there coverage for an indirect loss?

Coverage for an indirect loss is available when the direct loss is covered. Indirect losses arise as a consequence of a direct loss; they are not caused directly by physical damage but occur as a result of that damage. For example, if a fire damages a business, the direct loss would be the cost of repairing the property, while the indirect loss could include lost profits because the business could not operate while repairs were made.

In the context of insurance policies, if the direct loss caused by a covered peril triggers an event leading to indirect losses, those indirect losses may also be covered. This link between direct and indirect losses is essential in understanding how property and casualty insurance works, as it emphasizes the importance of the initial covered loss for any subsequent claims regarding indirect loss.

The other options do not accurately capture the relationship between direct and indirect losses as they relate to coverage under a policy. Simply listing indirect losses in a policy, making them predictable, or including a specific peril does not guarantee coverage; the cornerstone of coverage for indirect losses is that they stem from a covered direct loss.