Which of the following would likely be considered an indirect loss?

When evaluating the nature of losses in property insurance, it's essential to distinguish between direct and indirect losses. A direct loss typically refers to physical damage to property itself, such as destruction caused by a fire, theft, or other perils. Indirect losses, on the other hand, occur as a consequence of a direct loss.

Lost rental income due to property damage is a prime example of an indirect loss. This type of loss arises when the property is rendered unusable, resulting in the owner being unable to generate income from it. For example, if a rental property is damaged by a fire, the owner not only has to handle the direct costs of repairs, but they also lose out on the income that would have been generated from tenants during the repair period. This future income is not an immediate damage to the property itself; rather, it is a consequence of the initial loss.

In contrast, damage from a fire, destruction of inventory, and theft of property are all categorized as direct losses because they involve immediate physical damage or loss of the property itself. Each of these scenarios results in tangible damage that directly affects the value or usability of that property. Therefore, recognizing lost rental income as an indirect loss underscores the broader impacts that property damage can have on