Insurance Terms & Concepts
Which of the following is a CONSEQUENTIAL (indirect) loss rather than a direct loss?
Answer
Food spoiling in a freezer after a covered windstorm cuts the electricity
'CONSEQUENTIAL LOSS — Financial loss occurring as the consequence of some other loss, often called an indirect loss.' The glossary gives this example: where windstorm is a covered peril and 'a tree is blown down and cuts electricity used to power a freezer and the food in the freezer spoils,' the food spoilage is a consequential loss. A direct loss is 'financial loss that results directly from an insured peril.'
Source: Conn. Insurance Dept., Glossary of Insurance Terms
Not the answer
- A roof torn off by a covered windstorm
- Merchandise burned in a covered fire
- A vehicle crushed in a covered collision
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