What term describes the cause of a loss, such as fire, windstorm, or explosion?

What term describes the cause of a loss, such as fire, windstorm, or explosion?

• A. Peril
• B. Indemnify
• C. Hold-Harmless Agreement
• D. Subrogation

Answer: (A)

Peril is the event that causes a loss under an insurance policy. It names what happened—fire, windstorm, explosion—and triggers coverage when that event occurs. Distinguishing this from a hazard helps: a hazard is a condition that increases the chance of a loss (like faulty wiring) but isn’t the loss itself. The other terms describe actions or processes, not the cause of loss: indemnify means to compensate for a loss; a hold-harmless agreement is a contract clause shifting risk; subrogation is the insurer’s right to seek recovery from a third party after paying a claim.

Peril is the event that causes a loss under an insurance policy. It names what happened—fire, windstorm, explosion—and triggers coverage when that event occurs. Distinguishing this from a hazard helps: a hazard is a condition that increases the chance of a loss (like faulty wiring) but isn’t the loss itself. The other terms describe actions or processes, not the cause of loss: indemnify means to compensate for a loss; a hold-harmless agreement is a contract clause shifting risk; subrogation is the insurer’s right to seek recovery from a third party after paying a claim.