What is the definition of Loss?
A loss, when it comes to the insurance industry, refers to the reduction (total or partial) in the value or quality of a certain property. "Loss" may also be used to refer to one's legal liability.
There are events that result to a loss. Insurance is bought to protect against the loss in case the covered event happens. For instance, life insurance is bought to protect against the death of the breadwinner. The loss, in this case, would be the loss of income earned by the breadwinner. Other events that may be insured for losses would include earthquakes, automobile accidents, fires and injuries in the work place.
There are basically important elements in a loss that is insurable. One, it has to be accidental, or out of the control of the one who stands to benefit with the insurance. Two, the loss has to be large enough to warrant insurance. This is because there are also other costs related in issuing an insurance policy, and it may not be cost-effective to buy insurance when it will only cover small losses.
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