Which type of losses are covered by the standard property insurance policy?

The standard property insurance policy primarily covers direct losses, which are losses that result in physical damage to property. Direct losses can include events such as fire, theft, vandalism, and weather-related incidents that damage a building or its contents. This type of coverage is designed to protect the insured against immediate and tangible damage to their property.

Indirect losses, on the other hand, refer to consequential damages that occur as a result of a direct loss. For instance, if a fire destroys a business, the loss of income while the business is closed would be considered an indirect loss. While some policies may offer coverage for indirect losses under specific circumstances or as an additional endorsement, the standard property insurance policy does not include them as part of its basic coverage.

Therefore, the emphasis on covering direct losses is crucial in understanding how property insurance functions and what it aims to protect against. The policy's focus on direct losses ensures that policyholders can recover from immediate damage, which is the core purpose of property insurance.