Covered Losses

What Does Covered Losses Mean?

Covered losses refer to financial losses for which an insurance company will provide reimbursement according to the terms of an insurance policy. The primary reason people usually purchase insurance policies is to have their losses covered. The specific losses that are covered can vary between different policies and types of insurance.

Insuranceopedia Explains Covered Losses

Insurance companies only provide coverage for losses that are explicitly stated in the insurance policy. For instance, a homeowner’s insurance policy may not cover losses resulting from acts of God, such as a tornado. In this case, any damage incurred from a tornado would not be considered a covered loss, and the insurance company would not provide financial reimbursement for such losses. Conversely, if the insurance policy specifies that fire damage is covered, then losses resulting from fires would be reimbursed up to the maximum limit outlined in the policy.