What does indirect loss refer to in insurance?

Indirect loss refers to losses that occur as a consequence of a direct loss. When a direct loss, such as damage to property from a fire, takes place, it can lead to additional financial repercussions that are not directly tied to the physical damage itself. These repercussions might include loss of income during the time the property is being repaired or additional costs incurred because of the event.

For instance, if a business suffers fire damage and has to close for repairs, the income not generated during that closure period is an example of indirect loss. This type of loss is important in insurance because it reflects the broader financial impact of a loss event beyond the immediate or physical damages.

The other options do not capture the essence of what indirect loss means in an insurance context. Damage that happens during repairs is part of the repair process and not an indirect consequence of a loss. Costs associated with reinstating property may relate to direct delivery costs of bringing a property back to its original state, not losses stemming from the event itself. Minimal impacts that do not lead to claims do not represent losses significant enough to fall under the definitions commonly used for insurance losses.