Which term describes the financial loss incurred due to an insured event?

The term that describes the financial loss incurred due to an insured event is "Loss." In the context of insurance, a loss refers specifically to the monetary value that an insured individual or entity suffers as a result of an event that is covered by their insurance policy.

For instance, if a homeowner experiences damage to their property due to a fire, the financial impact of repairing that damage would be classified as a loss. This concept is central to the functioning of insurance, as policies are designed to provide compensation for these losses, thereby helping policyholders recover financially after unfortunate incidents.

Other terms, while related, refer to different concepts in the insurance process. A claim represents a formal request made by the insured to the insurer for compensation following a loss. A settlement refers to the resolution of that claim, which may involve payment from the insurer to the insured to cover the loss. Meanwhile, a premium is the amount paid by the insured to the insurer to maintain coverage, but it does not relate to the financial impact of an insured event itself.

Understanding these distinctions helps clarify how each term fits into the broader context of insurance and risk management.