What does the insurance term "loss mitigation" refer to?

The term "loss mitigation" in the context of insurance refers specifically to actions taken to prevent further damage after an initial loss has occurred. This concept is critical in the insurance industry because once damage happens—such as in cases of fire, water intrusion, or natural disasters—there is a responsibility to act swiftly to minimize any additional harm that may arise from the initial situation.

For example, if water damage occurs due to a leaky pipe, immediate steps such as stopping the flow of water and removing wet materials would be part of loss mitigation efforts. By effectively addressing and containing the situation, it helps ensure that the extent of the damage does not grow, which in turn can lead to lower repair costs and faster recovery.

Understanding the cause of damage, repairing the initial loss, and estimating the loss are important steps in managing the overall situation, but they do not directly address the immediate need to stop additional harm from happening after the initial loss. Hence, while those other options are related to the overall process of handling a claim, they do not encapsulate the specific focus of loss mitigation.