A loss of rental income due to a fire in an apartment building is an example of which type of risk?

A loss of rental income due to a fire in an apartment building is categorized as indirect damage because it arises as a consequence of direct damage to the property itself. In this scenario, while the fire directly damages the physical structure of the apartment building, the subsequent loss of rental income is not a tangible loss of property but rather a financial consequence stemming from the incident.

Indirect damage, often referred to as consequential loss, includes financial impacts that are related to the initial event. For instance, while the apartment cannot be rented out due to the fire damage, the owner suffers a loss of income that they would have otherwise received. This distinction is crucial because insurance policies often cover direct damages separately from any consequential or indirect losses, necessitating specific provisions or additional coverage for those income losses.

The other types of risks presented, such as direct damage, property excluded, and insurable peril, refer to different concepts related to insurance and thus do not apply in this situation. Direct damage pertains to physical loss or damage to property itself, property excluded indicates items or circumstances not covered by an insurance policy, and insurable peril refers to risks that can be covered under an insurance contract. In the case of rental income loss due to a fire, the critical aspect is recognizing the nature