What is defined as a financial loss incurred when the cost to preserve an asset exceeds its recoverable value?

The term that is defined as a financial loss incurred when the cost to preserve an asset exceeds its recoverable value is indeed referred to as actual loss. This situation occurs when the expenses associated with maintaining or protecting an asset—such as repair costs or other preservation measures—exceed the value that could be recovered from that asset if sold or utilized.

Understanding actual loss is important because it helps to assess whether it's financially feasible to maintain an asset or if it would be more prudent to dispose of it. This concept is crucial in risk management and insurance, as recognizing when an asset's preservation becomes more burdensome than beneficial can inform decisions about claims, coverage, and overall asset management strategies.

In contrast, the other options represent different aspects of financial impacts related to insurance or asset management but do not specifically address this scenario. Each of those terms—contingent loss, potential loss, and insured loss—focuses on other dimensions of loss, such as future uncertainties or losses that are covered under insurance policies.