Arkansas Insurance Adjuster Practice Exam

Rental car expense due to an accident would be considered a:

1. physical hazard

2. direct loss

3. proximate cause

4. indirect loss

The correct answer is: indirect loss

Rental car expense due to an accident would be considered an indirect loss because it is a consequence of the direct loss (the accident) and is not a direct result of the accident itself. Option A, physical hazard, refers to inherent characteristics of the property that make it more susceptible to loss; this would not apply to rental car expenses. Option B, direct loss, refers to the initial loss or damage, but does not include any additional expenses that may result from it. Option C, proximate cause, refers to the event that set in motion the chain of events leading to the loss, and in this case, the accident itself is the proximate cause, not the rental car expense. Therefore, option D, indirect loss, is the correct answer.