An additional loss that results from a direct loss of property is referred to as what?

The term that describes an additional loss stemming from a direct loss of property is known as an indirect loss. This type of loss occurs when a primary loss (such as damage to property) causes secondary financial consequences. For example, if a business experiences a fire that damages its building and inventory, the direct loss is the physical damage to the property. The indirect loss, however, could include lost income due to business interruption while repairs are made, as well as additional expenses incurred like temporary relocation.

This distinction is significant in insurance because policy coverage often varies between direct and indirect losses. While direct losses generally refer to the immediate and physical damage to an asset, indirect losses can take longer to manifest and may require special considerations in coverage policies, as they are not always automatically included. Understanding this concept helps in recognizing the broader implications of property loss beyond just the tangible damage.