Catastrophic loss is a total loss of property with no chance of recovery. They usually require a large insurance payment to cover the damage and clean up the aftermath. The most common types of catastrophic losses are:
1) Natural disaster. Natural catastrophes include weather phenomenon such as tornadoes, hurricanes, floods, winds, and hail. They often cause total devastation of entire streets, neighborhoods, sometimes even cities. The cost to clean up the area and rebuild is extremely high, and the payout takes a long time to deliver. Most recently, the mudslides and San Diego wildfire insurance claims would fall under this category.
2) Man-made catastrophes. Man-made catastrophes are those caused by humans. These include acts of terrorism, arson, gun violence, and bombs. The largest occurrence of man-made catastrophe was the attacks on the World Trade Center on September 11.