Texas All Lines Adjuster Practice Test

What kind of loss does the term 'direct loss' specifically refer to?

1. Loss due to negligence

2. Loss caused by a peril impacting tangible property

3. Loss related to emotional distress

4. Loss not covered by general liability

The correct answer is: Loss caused by a peril impacting tangible property

The term 'direct loss' specifically refers to a loss that occurs as a direct result of a peril impacting tangible property. This kind of loss is typically associated with physical damage to property caused by incidents such as fire, theft, or natural disasters. In insurance terms, direct loss is easily identifiable because it connects the loss directly to a covered event or peril. By focusing on tangible property, this definition helps differentiate direct losses from other types of losses that may not involve physical damage or may involve consequences that arise from other factors, such as negligence or emotional distress. Understanding direct loss is critical for adjusters, as it informs the claims process and determination of coverage under different types of insurance policies.