What type of loss is considered direct if an insured peril was the proximate cause?

Direct loss refers to damage or loss of property that occurs as a direct result of a covered peril. In the context of insurance, a peril is an event or occurrence that results in loss or damage, such as fire, theft, or vandalism. When an insured peril is identified as the proximate cause of the loss, it means that this event directly led to the damage or destruction of property, thus qualifying it as a direct loss.

For example, if a fire (an insured peril) destroys a homeowner's house, the destruction of the house is considered a direct loss since the fire was the cause of the damage. In this scenario, the compensation from the insurance policy would apply directly to the value of the property that was lost or damaged.

On the other hand, losses such as indirect or consequential losses arise from the effects of the direct loss rather than from the event itself, and would not qualify as direct losses. Therefore, recognizing that only direct losses stem from circumstances where the insured peril is the immediate cause is pivotal in understanding how insurance policies treat these types of losses.