Loss Severity

Loss severity is the amount of damage that results from a loss. Loss severity is used to predict how costly future losses are likely to be. An example of loss severity is the business that is located on the flood plain will suffer property damage during a rising water claim and also some business interruption while clean up is being performed.

Insurance answer
Your risk management program is to help you determine the frequency and severity of losses. Insurance is only one part of this whole situation. Some of the losses can be avoided or controlled. Talk to your agent or broker about what is best for your particular situation.