General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Which option correctly pairs each insurance term with its meaning, in the order risk, peril, hazard?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Risk is the uncertainty or chance of loss. A peril is the event that causes the loss, such as an illness, accident, or fire. A hazard is a condition that increases the chance or severity of a loss, such as obesity, a slippery floor, or dishonest intent. Keeping these three terms straight is essential because each plays a different role: risk is what is transferred, perils are what policies cover, and hazards are what underwriters evaluate when classifying a risk.
Why the other options are wrong
- B) This order scrambles the definitions: the cause of loss is the peril, not risk, and uncertainty is not a condition that increases loss.
- C) A condition that increases loss is a hazard, not risk, and the cause of loss is the peril, not hazard.
- D) This option wrongly places the hazard definition second and the peril definition third; the correct order is risk, peril, hazard.
Memory hook
Risk = the maybe. Peril = the trigger. Hazard = the fuel. Three words, fixed order.