What is the term for the causes of loss insured against in an insurance policy?

• A. Peril
• B. Hazard
• C. Risk
• D. Loss

Answer: (A)

Peril is the term for the cause of a loss that an insurance policy covers. It’s the specific event or factor that, if it occurs, leads to damage or financial hardship—things like fire, theft, or a windstorm. Hazards are different: they’re conditions that make a loss more likely or more severe, such as leaving a kettle unattended or faulty wiring. They don’t themselves cause the loss, but they raise the chance it could happen. Risk is the broader idea of exposure to loss—the overall possibility and potential severity of a loss, which insurance aims to manage by covering losses that result from covered perils. Some policies list specific perils (named perils), while others cover all perils except those that are excluded (open or all-risk).