The chance or uncertainty of loss is known as ______.

The chance or uncertainty of loss is known as ______.

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

Answer: (A)

The main idea here is the probability and potential size of a loss. In insurance terms, risk is the chance that a loss will occur and how severe that loss could be. It’s about uncertainty and the expected impact if something happens. Hazard is a condition that makes a loss more likely from a specific cause. Peril is the actual cause of the loss (like fire or theft). Exposure refers to the value or property that could be damaged or lost—the item at risk. For example, a home with faulty wiring has a hazard that increases the risk of a fire. The peril would be the fire itself, and the exposure is the home's value or the amount of insurance coverage at stake.

The main idea here is the probability and potential size of a loss. In insurance terms, risk is the chance that a loss will occur and how severe that loss could be. It’s about uncertainty and the expected impact if something happens.

Hazard is a condition that makes a loss more likely from a specific cause. Peril is the actual cause of the loss (like fire or theft). Exposure refers to the value or property that could be damaged or lost—the item at risk.

For example, a home with faulty wiring has a hazard that increases the risk of a fire. The peril would be the fire itself, and the exposure is the home's value or the amount of insurance coverage at stake.