Peril and Hazzard

   RISK AND INSURANCE

Ø Perils: peril refers to specific events which might cause a loss.

·        Perils are risk being insured against.

·        Loss arising out of peril can be loss of life or loss of property

Ø Hazard: hazard is a condition that either increases the chance that a peril will happen or may cause its effects to be worse, if it does.

Ø Hazards can be categorized as physical hazard and moral hazard

·        Physical hazard refers to dimensions  and physical characteristics of the risk.

·        Moral hazard refers to habits and activities of the individual that increases the risk 

Ø Some hazards that would cause an individual to be categorized as high risk are

·        Risky job profile

·        Existing medical condition

·        Life style of individual

·        Imposing restrictions on the sum assured

·        Term or a lien etc