Causes Of Loss

Front 1

Peril

Back 1

A peril is a cause of loss.

Front 2

Hazard

Back 2

A condition that increases the likely number of losses or the likely severity of a loss.

Front 3

Examples of perils

Back 3

Fire, explosion, windstorm, flood, theft, collision

Front 4

Named perils policies

Back 4

Named perils policies list the perils that are covered by the insurance. The burden of proof is on the policyholder, or the insured.

Front 5

Open perils policies

Back 5

Open perils policies cover losses to covered property unless the losses were caused by an EXCULDED peril, such as blood or earthquake. The burden of proof is on the insurer.

Front 6

DIC policy

Back 6

Difference in conditions: a separate policy that covers perils not covered by commercial property policy

Front 7

Three Types of Hazards

Back 7

Moral Hazard: promotes risk-taking for personal gain; malice

Morale Hazard: benign evolution / unconscious change; passive indifference with the knowledge that insurance will cover it.

Physical Hazard: individual physical characteristics that increase the chance of loss. They exist due to the presence of some physical condition.

Front 8

Concurrent causes of loss

Back 8

If a loss involves at least one covered peril, loss is covered even if other perils are not covered