P&CTexasmedium
A kitchen fire starts because of a faulty gas stove. Which term correctly labels the faulty stove and which labels the fire itself?
AThe faulty stove is the peril; the fire is the hazard
BBoth the stove and the fire are perils
CBoth the stove and the fire are hazards
The faulty stove is the hazard; the fire is the peril
Why this is the answer
A peril is the actual event or cause that produces the loss — in this case, the fire itself. A hazard is a condition that increases the probability or severity of a loss from a peril. The defective gas stove is a physical hazard because it creates conditions where fire (the peril) is more likely to occur. Confusing the two is one of the most common errors on P&C licensing exams. Remembering 'P is for Problem that happened; H is for how likely it is to happen' helps keep them straight.
Studying for the Texas Property & Casualty exam?
This question comes from our P&C bank. Take a free practice test — no signup.