Loss
Definition
The reduction in value of an insured item or the amount of damage suffered. A loss triggers the insurance policy's coverage provisions.
Example
A hailstorm damages a commercial building's roof, causing $50,000 in repair costs. This $50,000 represents the loss, which is covered by the property insurance policy subject to the deductible and policy limits.
In Practice
Losses must be fortuitous (accidental) to be covered. Intentional losses are excluded. Losses are measured in various ways depending on the type of insurance and policy terms. Property losses are typically measured by repair cost or actual cash value. Liability losses include both damages and defense costs.