Direct Loss

Published: | Updated: December 2, 2017

Definition - What does Direct Loss mean?

A direct loss refers to physical or financial loss or injury as a direct result of an unbroken chain of events or a proximate cause that led to a risk covered by an insurance policy. The latter refers to a cause that immediately precedes the damage or injury, and without which or in case of the presence of supervening events, no damage or injury would have resulted.

Insuranceopedia explains Direct Loss

Direct loss is differentiated from consequential loss and indirect loss. The latter two refer to damages or injuries caused not by the direct action of the insured but by some other event or factor following the action of the insured. To illustrate, office furniture lost during fire is a direct loss. However, a car lost due to fire because the owner chose to park it next to a burning building to take a closer look at the incident would not be a direct loss.

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