What is the definition of Direct Loss?

The definition of Direct Loss is best captured by the immediate damage caused by a peril. This type of loss refers specifically to the tangible harm that occurs to property as a direct result of an identified risk or hazard, often referred to as a peril. For instance, if a fire damages a building, the repair costs required to restore that structure to its previous condition represent a direct loss.

This contrasts with other types of losses that may be indirectly related to perils. Loss of income over time pertains more to consequential losses, which arise from the inability to use the damaged property for its intended purpose. Unanticipated repair costs can be considered part of both direct and indirect losses, but they do not define the concept of direct loss itself. Finally, losses from the enforcement of building codes would fall under specific regulatory costs rather than being categorized as direct losses since they do not result from the immediate impact of the peril.