Catastrophic Loss
Definition:
A loss that affects a large area, causes severe damage, and impacts many policyholders at once.
Explanation:
Insurers categorize catastrophic losses separately due to their widespread impact. These events often strain insurer resources and lead to the use of CAT adjusters.
Example:
A hurricane that destroys thousands of homes in a coastal region is considered a catastrophic loss.
Why it matters:
This term affects how claims are handled and what payout a homeowner may receive.