Direct Loss is defined as ...

• A. Physical harm to tangible property
• B. Economic loss
• C. Loss of income only
• D. Unpaid claims

Answer: (A)

Direct loss refers to the actual physical damage to property from a covered peril. It is the tangible harm done to the asset itself—think of a broken window, a fire-damaged roof, or a dented car. These are changes to the physical state of the property that you can see and measure.

Indirect losses, by contrast, come from the consequences of that damage, not the damage itself. Examples include lost income due to being unable to operate, or extra expenses required to cover the interruption. Unpaid claims aren’t about physical damage to property, so they don’t describe a direct loss.