What characterizes direct loss?

Direct loss is characterized by physical harm to tangible property, which involves destruction, damage, or deterioration that affects the property itself. This type of loss is fundamental in property insurance, as it directly impacts the value or usability of the insured item. For instance, if a building suffers from fire damage, the resulting destruction is a direct loss because it affects the physical structure itself.

In contrast, other options reflect different forms of financial impacts or indirect consequences. For example, loss of income due to damaged property, insurance fraud claims, and litigation costs are all related to the repercussions of a direct loss but do not define the nature of direct loss itself. These options focus on the financial implications or legal issues arising from the initial physical damage, rather than the damage to the property itself, which is the essence of direct loss.