A direct cause of loss is the immediate action that caused loss or damage. An indirect cause of loss is a loss that occurs secondarily. To understand this better here are some examples of direct and indirect losses.
Direct Loss Examples:
There is a fire in your warehouse caused by an extension cord. Some of your inventory and raw materials are burned and others are damaged by smoke.
On your way to a farmers market you are in a vehicle accident that causes your trailer to overturn damaging the items, you planned to sell.
The metal shed in your yard collapsed from the weight of heavy snowfall, and the raw materials that were stored in the shed were damaged by the collapse.
Indirect Loss Examples:
A branch falls on a power line and cuts power to your warehouse as a result of the power outage the food stored in your refrigerated warehouse spoils.
A hurricane passes through your city causing widespread flooding. Your home is flooded by storm water seeping in through your doors. Your products are destroyed by the flood waters.