What types of losses can be covered by a commercial property insurance policy?

A commercial property insurance policy is designed to cover a wide range of potential losses that a business might face due to unforeseen events. The policy typically covers both direct and indirect losses.

Direct losses refer to physical damage to property, such as buildings, equipment, and inventory, caused by incidents like fire, windstorm, or vandalism. These are tangible losses that directly affect the business's assets.

Indirect losses, on the other hand, involve the broader economic impact on a business resulting from a direct loss. For instance, if a fire causes damage to a building, the business may lose income while it is unable to operate, leading to additional expenses such as temporary relocation or ongoing payroll costs. Business interruption is a key component of indirect loss coverage in many commercial property insurance policies.

Given that a comprehensive commercial property insurance policy aims to protect businesses from both types of losses, the correct answer confirms that it covers both direct and indirect losses. This dual coverage is crucial for ensuring that businesses can recover from both the immediate damage and the longer-term financial repercussions of such incidents.