General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
A hazard is best defined as a condition that:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
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.
Why the other options are wrong
- B) The direct cause of a loss is a peril, not a hazard.
- C) Hazards increase loss potential; no condition eliminates loss entirely in an insurable arrangement.
- D) Transferring a loss describes risk transfer, a management technique, not a hazard.
Memory hook
Hazards load the dice; perils roll them. Insurance prices the loaded dice.