General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
An insured regularly burns trash in a dry field near a wooden shed; a stray spark ignites the shed. Which option correctly pairs the peril and the hazard in this scenario?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
The peril is the actual cause of loss — the fire that destroyed the shed. The hazard is the condition that increased the chance of fire — the dry field and the wooden shed. Hazards may be physical (tangible conditions), moral (dishonesty), or morale (carelessness bred by the existence of coverage). Correctly separating peril from hazard is essential to risk classification and loss-prevention analysis.
Why the other options are wrong
- A) The shed is the property that was lost, not the cause of loss; fire remains the peril.
- C) The dry field is a condition increasing the chance of loss (a hazard), not the cause of loss itself.
- D) Only fire is the cause of loss; the dry field is a hazard, and the two terms cannot be used interchangeably.
Memory hook
Fire burns the shed: fire = peril; dry field and shed = hazards. Peril is the spark, hazard is the kindling.