Rhode Island Insurance Adjuster Exam

Which type of loss directly affects the insured property?

1. Indirect loss

2. Direct loss

3. Supplementary loss

4. Consequential loss

The correct answer is: Direct loss

A direct loss refers to an immediate and tangible impact on the insured property itself. This type of loss occurs when the property is damaged or destroyed due to a specified peril, such as a fire, theft, or natural disaster. For example, if a storm causes a tree to fall on a house, damaging the roof, this represents a direct loss because the property has been physically harmed. Understanding direct loss is crucial for insurance adjusters, as it forms the basis of many claims and determines the compensation owed to the insured for repair or replacement of the damaged property. It contrasts with indirect or consequential losses, which involve secondary effects of the initial damage, such as loss of income or additional living expenses that occur because of the direct loss. This distinction is important for evaluating claims accurately and providing appropriate solutions to policyholders.