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What is Loss?

In Risk Management on May 2, 2012 at 11:12 pm

Loss explained as part of Risk Management

The meaning of loss is the act of losing someone or something or the disadvantage that result from losing something. Loss is a common experience that can be encountered many times during a lifetime; it does not discriminate for age, race, sex, education, economic status, religion, culture or nationality.

Property loss in which the insured peril is the proximate cause (an unbroken chain of events) of the damage or destruction. Most basic property insurance policies (such as the standard fire policy) insure against only direct loss and not indirect loss or consequential loss. For example, a fire within the wall structure of a house causes the party walls and clothes to catch fire, which in turn fans flames onto the furniture-a direct loss. An indirect loss would be inconvenience of the inhabitants, who would not be able to sleep in their home, thus causing a drop in their efficiency at work.

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