Louisiana P&C Adjuster Practice Exam

What type of loss would the kennel charges incurred by Mary be considered?

1. A direct loss

2. An indirect loss

3. A covered loss

4. An unforeseen expense

The correct answer is: An indirect loss

The kennel charges incurred by Mary are classified as an indirect loss because they are not a direct result of damage to property but rather a consequence of that damage. Indirect losses, often referred to as consequential losses, arise when the damage to property leads to additional costs or expenses that would not have incurred otherwise. For example, if an insured property was damaged, the policyholder may need to incur additional expenses, such as kennel charges for pets during the time the property is being repaired. These charges do not directly result from the physical loss itself but stem from the repercussions of that loss, thus fitting the definition of an indirect loss. This distinction is key in understanding insurance coverage, as policies often differentiate between direct and indirect losses regarding what is covered.