What Does Loss Mean?
Loss, in the context of insurance, refers to damage or injury the policyholder suffers due to a peril, i.e., an accident or unfortunate event. It often is some sort of harm to a person, such as a concussion after an auto accident, or a reduction in property value. Insurance policies exist to protect people from substantial financial losses.
Moreover, loss can also refer to the amounts policyholders seek in claims for covered incidents. The insurance companies would have to pay out benefits for qualifying claims and endure financial losses.
Insuranceopedia Explains Loss
Examples of losses include a house being destroyed by a tornado, a car being totaled in an accident, and a boat being sunk in a hurricane. Without insurance, these losses could result in hundreds of thousands or even millions of dollars in financial damages. However, insurance policies can prevent the owners of the property from having to shoulder the entirety of the financial burden. Moreover, people can try to prevent losses by avoiding dangerous situations like speeding on the highway or going sailing in a violent storm. However, accidents still can happen even in the safest of conditions. This is why many people purchase insurance.