Which term describes something that increases the probability that a loss will occur?

• A. Peril
• B. Hazard
• C. Abandonment
• D. Severability

Answer: (B)

Hazard is a condition that increases the probability that a loss will occur. In insurance terms, a peril is the actual event that causes a loss (like fire or theft), while a hazard makes that loss more likely or more severe by creating exposure or vulnerability. For example, an electrical cord fraying and becoming a fire hazard increases the chance a fire could start, even though the peril is the fire itself. Abandonment relates to giving up rights or property, and severability concerns whether parts of a contract stand if another part is unenforceable. So the term that describes something that raises the likelihood of a loss is hazard.