Which term is defined as a condition or situation that increases the probability of an insured loss occurring?

Which term is defined as a condition or situation that increases the probability of an insured loss occurring?

• A. Speculative risk
• B. Hazard
• C. Morale hazard
• D. Peril

Answer: (B)

Hazard is a condition or situation that increases the probability of a loss occurring. It isn’t the loss itself or the event that causes the loss, but rather something about the environment, operations, or behavior that makes a loss more likely. Examples include a wet floor, faulty wiring, or icy roads. Peril, on the other hand, is the actual cause of the loss (the fire, the fall, the flood). Speculative risk involves the chance of either gain or loss, which isn’t what’s being described here. Morale hazard refers to a careless or indifferent attitude that increases risk, but it’s still a type of hazard; the overall concept described is hazard itself.

Hazard is a condition or situation that increases the probability of a loss occurring. It isn’t the loss itself or the event that causes the loss, but rather something about the environment, operations, or behavior that makes a loss more likely. Examples include a wet floor, faulty wiring, or icy roads. Peril, on the other hand, is the actual cause of the loss (the fire, the fall, the flood). Speculative risk involves the chance of either gain or loss, which isn’t what’s being described here. Morale hazard refers to a careless or indifferent attitude that increases risk, but it’s still a type of hazard; the overall concept described is hazard itself.