South Carolina Life and Health Practice Exam

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

1. Hazard

2. Peril

3. Exposure

4. Liability

The correct answer is: Peril

The term that is defined as the immediate specific event causing loss and giving rise to risk is "peril." In the context of insurance and risk management, a peril refers to the actual event that leads to a loss or a claim. Common examples of perils include fire, theft, and natural disasters like floods or earthquakes. When an insurance policy is written, it typically lists the perils that are covered. Understanding this concept is crucial for those in the insurance industry because it helps determine what risks are insurable and how policies will respond to specific claims. The identification and assessment of perils allow insurers to calculate premiums based on the likelihood of those events occurring and the potential financial impact they may have.