Which statement correctly distinguishes a hazard from a peril?

Why B is correct

A hazard is any condition, circumstance, or behavior that increases the chance that a loss will occur. Hazards may be physical, such as faulty wiring; moral, such as dishonesty; or morale, such as carelessness that develops because insurance exists. A peril is the actual event that causes the loss, such as fire, wind, or theft. Hazards increase the likelihood that a peril will strike, so the two concepts are related but distinct: hazards precede and aggravate the perils that ultimately cause losses.

Why the other options are wrong

• D) This reverses the definitions. The actual cause of the loss is the peril, while the hazard is the condition that increases the likelihood that the loss will occur. This option reflects a different rule and does not match the law that governs the transaction.
• A) The terms describe different concepts. A hazard is a condition that increases loss likelihood, while a peril is the cause of the loss, so they are not interchangeable. Accordingly, this plausible-sounding answer is one that examiners expect candidates to eliminate.
• C) Perils are events, not necessarily objects, and hazards include physical conditions as well as moral and morale conditions. Neither term is limited to the categories described. This statement does not survive the statutory analysis presented above and is therefore wrong.

Memory hook

Hazard raises the odds; peril is the event itself. Hazard is the wet floor, peril is the fall.