What is the immediate specific event causing loss and giving rise to risk?

• A. Hazard
• B. Risk
• C. Peril
• D. Loss

Answer: (C)

In insurance terms, a peril is the immediate specific event that causes a loss. It’s the actual thing that triggers the damage or financial drop and creates exposure to risk. For example, a house fire is a peril because it directly causes the loss of property and establishes the risk of that loss happening. A hazard, on the other hand, is a condition that increases the chance or severity of a loss, but it isn’t the event that causes the loss itself. Risk refers to the probability and potential magnitude of loss, not the triggering event. Loss is the actual amount of damage that occurs after the peril happens. So the immediate event causing the loss and giving rise to risk is the peril.