General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
A fire destroys a home. In insurance terms, the fire is the:
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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. Fire, wind, theft, and death are perils because they are the events that trigger losses under insurance policies. In this case, the fire is the event that caused the home to burn, so the fire is the peril. Insurance policies name the perils they cover, and identifying the peril is essential to determining whether a particular loss is covered. A hazard, by contrast, is a condition that increases the chance of a loss, and risk is the uncertainty of loss rather than the event that causes it.
Why the other options are wrong
- C) A hazard is a condition that increases the chance that a loss will occur, such as faulty wiring or the presence of flammable materials. It is not the cause of the loss itself.
- D) Risk is the uncertainty regarding whether a loss will occur. The fire is the event that causes the loss, not the uncertainty of loss. The controlling legal standard set out above demonstrates precisely why this option is incorrect.
- B) A loss exposure is the possibility of loss to something of value, such as the home itself. The fire is the event that causes the loss to the exposure. This choice misstates what the statute actually requires, so it must be eliminated from consideration.
Memory hook
Peril pulls the trigger of loss: fire, wind, theft. Hazard just loads the gun.