What is defined as damage to property resulting from a covered peril?

The correct choice identifies direct loss as damage to property that occurs as a direct result of a peril that is covered by an insurance policy. This means that when a specific event, such as a fire, theft, or storm, causes physical harm to the property, the resulting damage is deemed a direct loss. For instance, if a windstorm damages a roof, the cost to repair that roof is a direct loss.

In the context of insurance, understanding this definition is crucial because it differentiates between types of losses. Direct losses are typically straightforward and covered under most property insurance policies, which aim to restore the property to its pre-loss condition following an incident caused by a covered peril.

Other types of losses, such as indirect loss, relate to financial impacts that arise as a consequence of direct loss. For example, if a business has to close due to damage to its premises, the lost revenue during that downtime would be classified as an indirect loss. Contingent loss and supplemental loss are less commonly used terms and may refer to specific situations or additional coverages rather than the immediate damage caused by the peril itself.

This clear distinction between direct loss and other types of loss is fundamental to understanding property insurance and how claims are processed.