Which type of loss is generally characterized as catastrophic?

Catastrophic losses are defined as significant and often sudden events that result in severe financial impact or devastation. A significant and unexpected financial loss can disrupt an individual or organization’s stability and may arise from natural disasters, major accidents, or large-scale incidents like lawsuits. Such losses are typically beyond what would be considered routine or manageable within normal risk-bearing limits, indicating their catastrophic nature.

In contrast, minor accidents, repairs, and losses covered by general liability insurance typically do not entail the same level of financial severity or unpredictability that characterizes catastrophic losses. They tend to be smaller in scale and are often anticipated within the operational budget or risk management framework. Therefore, while they can have their own impacts, they do not reach the level of being termed as catastrophic losses.