A power surge sparks a small electrical fire in an office building. The electrical fire triggers the automatic sprinkler system and the water from the sprinklers, soaks the carpet and shorts-out all the computers, causing thousands of dollars in damage. The office must close for two months during repairs. The cost of renting a temporary office space while the physical damage to the office building is repaired is considered:

Answer Choices: Select the Correct Answer

An indirect loss.

A physical loss.

A direct loss.

An occurrence.

The cost of renting a temporary office space while the physical damage to the office building is repaired is considered an indirect loss.

Explanation:

The indirect loss occurs when a direct loss occurs when no broken goods can be used. The expense to rent temporary retail space is an unintentional cost, often referred to as a substantive loss because the destroyed space is useless.

Revenue lost from a direct loss as a result of a fire in its facilities that a business cannot market its products.

If expressly included with the cost of the extra premium incidental risks are not protected by ordinary scheme policies. Notice also lack of effect.