What type of loss is defined as occurring from direct physical damage to property?

The definition of a loss that occurs from direct physical damage to property aligns with the concept of direct loss. This type of loss refers specifically to the tangible harm or destruction of a physical asset. When an insured property is damaged, such as in the case of a car accident or property damage from a fire, the resulting financial impact is categorized as a direct loss.

Understanding this category is crucial for insurance purposes, as policies often distinguish between direct and indirect losses when determining coverage and claims. The focus of direct loss is on the immediate effects of damage to the property itself, which serves as the basis for claims filed under a property insurance policy. Indirect loss, in contrast, arises from the consequences of the direct loss, such as loss of income because the business cannot operate while the property is being repaired, making the understanding of direct loss essential for both policyholders and insurers.