Which types of losses are included in the definition of 'losses' for insurance purposes?

Insurance policies typically define "losses" in a comprehensive manner to effectively cover the range of potential claims that can arise from various incidents. By including both catastrophic and non-catastrophic losses, insurers acknowledge that there are different scales and types of damages that insured parties may experience.

Catastrophic losses refer to significant, often sudden events that can cause extensive damage, such as natural disasters, which may result in large claims. Non-catastrophic losses, on the other hand, can involve lesser events that still lead to financial damages, such as minor accidents or gradual wear and tear. By encompassing both types, insurance coverage provides a broader safety net for policyholders, ensuring that they are protected against a variety of risks they might face. This comprehensive definition is essential for understanding how insurance responds to an array of damage scenarios, and why policyholders should be aware of the full spectrum of coverage available to them.