How is 'loss' defined in the context of an insurance policy?

In the context of an insurance policy, 'loss' is defined as a decrease in the value of the insured property. This definition captures the essence of what insurance is designed to address: the financial impact on an individual or entity resulting from damage, destruction, or theft of property that they have insured. When a loss occurs, it means that the value of the property in question has diminished, which is why the insured party would seek compensation from the insurance provider.

Other concepts, such as increased risk exposure or moral failings, do not align with the traditional definition of 'loss' in insurance terms. For example, an increase in risk exposure refers to a higher likelihood of a loss occurring, but it does not reflect an actual reduction in property value. Similarly, a moral failing or a fraudulent claim involves ethical considerations and behavior and does not pertain to the straightforward financial principles that underlie the concept of loss within an insurance context.