Crop Hail Insurance Practice Test

The choice highlighting the loss of income is correct because direct loss refers to the immediate impact resulting from damage to property, such as crops in the case of crop hail insurance. When crops are damaged, farmers may not be able to harvest and sell them, leading to a significant decrease in their income. This loss of revenue can affect their financial stability and ability to cover expenses, thereby illustrating a tangible consequence of direct loss.

Increased insurance premiums may arise over time due to claims history or risk assessment changes but is not a direct consequence of the immediate loss itself. The need for more coverage involves future planning and is not a direct result of the current loss. The option stating that no consequences can arise contradicts the fundamental principle of risk management as any loss event typically incurs some form of consequence, particularly for a farming operation reliant on its yield.