What does 'indirect loss' refer to?

Indirect loss refers to economic consequences that arise as a result of a direct loss. When an individual or business experiences a direct loss, such as damage to property or a vehicle, this immediate loss can trigger a series of subsequent financial impacts. For example, if a business's property is damaged in a fire, the direct loss would be the damage to the building and inventory. However, the indirect losses might include lost revenue due to business interruption, increase in operating costs during the recovery period, or potential long-term diminished sales as customers move to competitors. Thus, understanding indirect loss is crucial for assessing the total financial impact of an incident beyond the immediate physical damages.