General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
In insurance, a peril is best defined as:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A peril is the event or cause that produces a loss - fire, wind, theft, an auto accident, or a sickness. Policies are written to cover named perils or, in comprehensive forms, all perils except those excluded. Risk is the uncertainty of loss, a hazard is a condition that increases the chance of loss, and the dollar amount is the loss value or exposure.
Why the other options are wrong
- B) The uncertainty of loss is risk.
- C) A condition that increases loss likelihood is a hazard.
- D) The dollar amount of a potential loss is the amount of exposure or loss, not a peril.
Memory hook
Peril = the trigger event. Fire, crash, flu - they cause the loss.