A direct loss is damage the peril itself does to property. An indirect (consequential) loss is a loss that follows because of that damage.

Example: a windstorm tears the roof off a dairy's power room and knocks out the refrigeration. The roof damage is the direct loss. The milk in the cold room is never touched by wind or rain, but it spoils, so the spoiled milk is an indirect loss. Physical property can suffer an indirect loss; tangible does not mean direct.

Common indirect loss exposures after property damage: - net income lost during the shutdown - payroll and other expenses that continue during repairs - extra cost of operating from a temporary location - rent that stops because the building cannot be used The cost of rebuilding the damaged building itself is a direct loss.

Property coverage pays the insured for its own losses, such as its building, contents or lost business income. Liability (casualty) coverage pays others for injury or damage for which the insured is legally liable, such as commercial general liability, employers liability and auto bodily injury liability.