In insurance terms, what does 'Loss' refer to?

In insurance terminology, 'Loss' refers specifically to the financial impact incurred due to an event or claim that the insurance policy covers. This means the amount that the insurer is obligated to pay to the policyholder or a third party as compensation for the loss sustained. When a claim is made, it typically reflects the damage, injury, or other financial detriment faced, which is then subject to evaluation and payment from the insurer.

Understanding this concept is crucial, as it represents the tangible effects of an insurable risk. In context, insurance premium refers to the amount paid for coverage, risk assessment involves evaluating potential losses and determining insurance costs, and coverage limit signifies the maximum payout an insurer will cover for a claim. None of these adequately define 'Loss' as it pertains specifically to the claim amounts the insurer is responsible for paying out.