Indirect Loss is defined as ...

• A. Economic loss which flows as a result of direct loss
• B. Physical harm to tangible property
• C. Loss due to contract breach
• D. Direct payment of deductible

Answer: (A)

Indirect loss refers to the economic consequences that arise because of a direct loss to property. It’s the money impact that flows from the initial damage, such as losses of income, extra expenses to get back to business, or costs to continue operations while repairs are underway. That’s why the best description is economic loss which flows as a result of direct loss.

The other descriptions describe different concepts: physical harm to tangible property is the direct loss itself, not the subsequent economic impact. Loss due to contract breach relates to obligations outside of property damage, and direct payment of a deductible is not a loss type at all but the insured’s out-of-pocket payment.