Direct Loss

What Does Direct Loss Mean?

A direct loss refers to physical or financial loss or injury that occurs as a direct result of an unbroken chain of events or a proximate cause covered by an insurance policy. The term “proximate cause” refers to the immediate factor that precedes the damage or injury; without this cause, or in the presence of intervening events, no damage or injury would have occurred.

Insuranceopedia Explains Direct Loss

Direct loss is distinct from consequential loss and indirect loss. The latter two terms refer to damages or injuries that result not from the direct action of the insured but from some other event or factor following the insured’s action. For example, office furniture damaged in a fire is considered a direct loss. In contrast, a car that is lost due to being parked next to a burning building—because the owner chose to get a closer look at the incident—would not be classified as a direct loss.