In property insurance, what does "actual loss sustained" mean?

The term "actual loss sustained" in property insurance refers specifically to the financial loss that an insured person experiences as a result of a covered peril during a specific time period. This concept is crucial because the insurer is typically liable to compensate the policyholder for the actual loss suffered, rather than a theoretical amount or value of property.

This means that if a property is damaged or lost due to an event covered by the insurance policy, the insured would be entitled to recover the amount that accurately reflects the loss they have faced, as supported by documentation and assessment of damages. This principle ensures that policyholders receive appropriate reimbursement based on their real financial impacts rather than preset values or estimates, aligning with the principle of indemnity in insurance, which aims to restore the insured to their financial position prior to the loss without profiting from it.