What is the term for the reduction of value in property insured by a peril?

The term for the reduction of value in property insured by a peril is referred to as "loss." In the insurance context, a loss occurs when an insured peril, such as fire or theft, causes a reduction in the value of the property. This loss can be quantified in financial terms, typically assessed during the claims process, where the insurer evaluates the extent of the damage and determines the compensation owed to the policyholder.

Understanding the specific meaning of "loss" is crucial for anyone involved in property insurance, as it directly influences how claims are filed and resolved. Although terms like "claim," "depreciation," and "settlement" are related to the insurance and property valuation processes, they refer to different aspects: a claim is the request for payment from the insurer, depreciation involves the decrease in property value over time due to wear and tear, and settlement is the resolution of a claim, including the payment made by the insurer. Nonetheless, "loss" specifically addresses the immediate impact of an insured peril on property value, making it the most accurate term in this context.