What is the term for the reduction in value of the insured's property caused by an insured peril?

The term that describes the reduction in value of the insured's property due to an insured peril is known as "Loss." In the context of insurance, a loss occurs when there is damage, destruction, or a decrease in the value of property as a direct result of an incident covered by the policy, such as fire, theft, or natural disaster.

Understanding the concept of loss is essential in insurance because it forms the basis for claims. When a policyholder experiences a loss, they can file a claim to seek compensation for the decrease in their property's value caused by the covered event. This is why accurately defining and assessing loss is crucial for both insurers and policyholders.

The other terms provided, such as liability, coverage, and deductible, refer to different insurance concepts. Liability typically relates to the obligations one has to others, primarily in terms of legal responsibility. Coverage refers to the protection provided under an insurance policy against certain risks. Lastly, a deductible is the amount that the insured must pay out-of-pocket before the insurance coverage kicks in. These terms are related to the insurance process but do not directly describe the reduction in property value caused by an insured peril as the term "loss" does.