Property Insurance FundamentalsQuestion 226 of 474
The difference between a direct loss and an indirect or consequential loss is that the indirect loss is:
a.The physical damage the covered peril itself causes
b.The financial loss that follows the physical damage
c.The damage a neighbor's covered peril causes here
d.The portion of damage the deductible leaves unpaid
Explanation
A direct loss is the physical damage the peril causes; an indirect or consequential loss is the money loss that flows from it, such as additional living expense, lost rent or spoiled food. The choice describing physical damage from the peril defines direct loss, the very thing being contrasted. A neighbor's peril and the deductible have nothing to do with the distinction.
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