General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Which statement correctly distinguishes a peril from a loss in health insurance?
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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 of harm — the accident, illness, or injury that triggers a claim. The loss is the financial consequence of that event, such as medical expenses, lost wages, or other measurable damages. Insurance responds to losses caused by covered perils: the insurer indemnifies the insured for the economic damage that the peril produced, up to policy limits and subject to the policy's conditions.
Why the other options are wrong
- B) The peril is the event, not the dollar amount; the financial amount paid is the measure of the loss or the benefit, not the peril.
- C) The terms describe different stages — the cause versus the financial damage — and are not interchangeable.
- D) This reverses the relationship; the cause is the peril and the resulting financial damage is the loss.
Memory hook
Peril causes, loss costs. The accident is the peril; the bill is the loss.