Covered Losses

Definition - What does Covered Losses mean?

Covered losses are financial losses that an insurance company will provide financial reimbursement for, as per the terms of an insurance policy. The main reason why people usually buy insurance policies is to have their losses covered. The exact losses that are covered vary from policy to policy and insurance type to insurance type.

Insuranceopedia explains Covered Losses

Insurance companies will only provide coverage for losses that are specifically stated in an insurance policy. For example, a homeowner's insurance policy may not cover losses due to an act of God, such as a tornado. In such a case, losses incurred from tornado damage would not be considered covered losses. Thus the insurance company would provide no financial reimbursement for losses caused by tornadoes. However if the insurance policy stated that fire damage would be covered, then losses from fires would be covered up to the maximum limit.

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