Risk Classification

Increases the likelihood or severity of a loss — A hazard is any condition, physical or behavioral, that increases the chance or the severity of a loss. Examples include icy sidewalks, unguarded machinery, or careless habits. Hazards are divided into physical, moral, and morale categories, and underwriters evaluate them because they make the peril more likely to strike or the resulting loss more severe.

National insurance concept

Physical hazards — Physical hazards are tangible conditions that increase the chance of loss. Poorly controlled diabetes and work in a lead foundry are concrete, objective facts that raise the probability of illness or injury. Physical hazards can be identified, measured, and priced by underwriters. They are distinct from moral hazards, which involve dishonesty, and morale hazards, which involve carelessness, and they are not a type of risk such as a speculative risk, which involves a chance of gain.

National insurance concept