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A covered loss in the insurance industry refers to any type of loss that falls within the terms of an insurance policy, for which the insurer has agreed to provide coverage and, consequently, reimbursement. When an insured party suffers a loss that meets the policy's criteria—such as theft, damage, or liability—the insurer is responsible for compensating the insured according to the policy limits and terms.

In contrast, options that refer to negligible losses or those resulting in physical injury only do not fully encapsulate the broader nature of covered losses, which can encompass financial losses beyond physical injuries. Similarly, describing a loss that is excluded from coverage does not align with the definition of a covered loss, as it signifies a situation where no reimbursement would be available. Thus, the definition of a covered loss is firmly rooted in the understanding that the insurer is obligated to provide reimbursement for specified types of losses in accordance with the terms outlined in the insurance policy.