General Insurance PrinciplesQuestion 162 of 474
A condition that increases the chance or severity of a loss, such as a worn extension cord, is a:
a.Physical hazard
b.Peril
c.Moral hazard
d.Morale hazard
Explanation
A physical hazard is a tangible condition that increases the likelihood or severity of a loss, such as faulty wiring or a worn cord. A peril is the actual cause of loss, such as the fire itself. A moral hazard involves dishonesty (setting a fire to collect), and a morale hazard is carelessness because insurance exists. Distinguishing hazards from perils is a foundational concept.
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