Which scenario typically represents an Indirect Loss?

An indirect loss typically refers to costs that arise as a consequence of a direct loss. In this scenario, increased rent during repairs exemplifies an indirect loss because it is a subsequent expense that results from the primary event of damage. When a property is damaged, such as from a fire or flood, the owner may need to find alternative accommodations while repairs are being made, leading to increased living expenses or rental costs. This is a financial burden that follows the initial damage, which is characteristic of an indirect loss.

Direct losses, on the other hand, are the immediate damages to property that can be physically observed, such as the damage from a fire or flood. Loss of value due to depreciation involves the natural reduction in worth of an asset over time but is not directly tied to specific incidents or damages that lead to additional expenses.