General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
Fire, windstorm, theft, and illness are best classified in insurance terminology as:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A peril is the actual cause of a loss, meaning the event that triggers a claim, such as fire, windstorm, theft, or illness. Distinguishing perils from hazards matters because a policy insures against specified perils, while hazards are conditions that merely increase the likelihood or severity of those perils. For example, windstorm is the peril that damages a roof, and an aging roof is a hazard that may make the damage worse. Reading an insuring clause correctly therefore requires knowing which events are the covered perils of the contract.
Why the other options are wrong
- B) A hazard is a condition that increases the chance of loss, such as oily rags near a furnace, not the event that actually causes the loss.
- C) Morale risk is a type of hazard reflecting carelessness that arises after insurance is purchased; it is not an event that causes a loss.
- D) A loss exposure is a potential for loss, such as owning a home or operating a fleet of trucks, which is a situation rather than a cause of loss.
Memory hook
Peril pulls the trigger on the loss; hazard just loads the gun. Peril = the event, hazard = the condition.