Which term is defined as the cause of loss?

Which term is defined as the cause of loss?

• A. Peril
• B. Occurrence
• C. Risk
• D. Pure risk

Answer: (A)

Peril is the event that directly causes a loss. It names the trigger of damage—fire, flood, theft, windstorm, collision—so when that event occurs, the loss happens. Risk, by contrast, refers to the probability and potential severity of a loss given exposure; it’s about the likelihood and impact, not the actual cause. Occurrence can refer to the event that results in a claim within a policy period, but it’s not the inherent source of the loss. Pure risk describes a type of risk that involves only potential loss (or no loss) with no possibility of gain, not the cause of loss itself. So the term defined as the cause of loss is peril.

Peril is the event that directly causes a loss. It names the trigger of damage—fire, flood, theft, windstorm, collision—so when that event occurs, the loss happens. Risk, by contrast, refers to the probability and potential severity of a loss given exposure; it’s about the likelihood and impact, not the actual cause. Occurrence can refer to the event that results in a claim within a policy period, but it’s not the inherent source of the loss. Pure risk describes a type of risk that involves only potential loss (or no loss) with no possibility of gain, not the cause of loss itself. So the term defined as the cause of loss is peril.