Risks, Perils, and Hazards

Peril

A cause of loss.

Hazard

A condition that may increase either the chance (frequency) or the amount (severity) of loss arising from a peril.

Uncertainty

A lack of knowledge of what will or will not happen in the future.

Morale Hazard

Careless attitudes on the part of insured persons toward the occurrence of loss that increase the chance and/or amount of loss.

Property Risk

Direct loss or damage, or indirect loss (i.e. income, expenses).

Static Risks

Involving losses that would occur even if there were no changes in the economy.

Personal Risk

Loss of income earning ability.

Classes of Pure Risk

Personal risk, property risk, and liability risks.

Speculative Risk

Refers to those situations which involve not only the possibility of loss, but also the possibility of gain.

Fundamental Risk

Risks involving losses that are impersonal in origin and consequence.

Particular Risk

Risks involving losses which are viewed as being essentially personal in origin and consequence.

Dynamic Risks

Risks resulting from changes in the economy.

Moral Hazard

The dishonest tendencies inherent in the character of an insured person that increase the chance and/or amount of loss.

Physical Hazard

The natural properties of objects and their impersonal surroundings that increase the chance and/or amount of loss.

Risk

The possibility of financial loss that exists as a state of the real world.

Liability Risk

Unintentional injury to other persons or damage of their property through negligence or carelessness.

Pure Risk

Used to designate those situations which involve only the possibility of loss or no loss.