A loss exposure is anything that may cause a loss. This is an asset or condition exposed to a situation or occurrence that results in a financial loss to the primary party. There are three elements to loss exposures:
- Asset at risk of loss
- Cause of loss (peril)
- Cost of loss
Property loss exposure
Property loss exposure is the possibility of a financial loss caused by damage to property. The party must have a financial interest in the property to suffer a property loss. Financial interest means the party with would suffer a financial loss if the property suffered a loss.