What defines an actual loss according to insurance terminology?

An actual loss in insurance terminology refers to a tangible or measurable financial detriment experienced by an insured due to a covered event. The definition emphasizes losses that have occurred and can be quantified in terms of financial impact, often falling into categories such as property damage, liability, or other economic losses.

Among the options provided, identifying an actual loss as loss exceeding the cost of recovery aligns with the insurance principle of indemnity, which seeks to restore an insured party to their pre-loss financial position. This choice reflects the essence of an actual loss: it recognizes that the loss must not only happen but also be significant enough to surpass the costs involved in recovering from that loss.

The other choices, while they refer to scenarios that can involve financial losses, do not encapsulate the broader and more precise definition of actual loss in insurance terms. Loss incurred during natural disasters, loss of profit from an investment, and loss of assets due to theft each describe specific types of losses without establishing the criterion of measurement that defines an actual loss in the context of insurance. Thus, the focus on quantifiable loss in the selected answer corresponds closely to the foundational concepts of loss in insurance practice.