Hazard and Peril

Question 1

A peril is something that can cause a loss. Examples include falling, crashing your car, fire, wind, hail, lightning, water, volcanic eruptions, choking, or falling objects. A hazard is any condition or situation that makes it more likely that a peril will occur

Answer 1

The two related terms, “peril” and “hazard,” are often used in reference to the insurance industry. Essentially, a peril is something that causes, or can cause, a loss, while a hazard is something that makes the occurrence of a peril or loss more likely

Question 2

A specific risk or cause of loss covered by an insurance policy, such as a fire, windstorm, flood, or theft. A named-peril policy covers the policyholder only for the risks named in the policy in contrast to an all-risk policy, which covers all causes of loss except those specifically excluded

Answer 2

Condition or situation that creates or increases chance of loss in an insured risk, separated into two kinds (1) Physical hazard: physical environment which could increase or decrease the probability or severity of a loss. It can be managed through risk-improvement, insurance policy terms, and premium rates

Question 3

What is a moral hazard?

Answer 3

A hazard which relates to the policyholder such as advanced driving qualifications (positive) or previous convictions for fraud e.t.c (negative).

Question 4

What is a physical hazard?

Answer 4

A hazard with a physical relation to the risk such as garaged vehicle (good hazard) or a motorcycle left on the street with no padlock/immobiliser (bad hazard).

Question 5

What is a poor moral hazard?

Answer 5

A client who has a criminal record (such as DD, SP or other convictions including fraud)) or previous policies voided

Question 6

What is a good physical hazard?

Answer 6

Garaged alarmed car, CCTV, immobiliser etc