A physical or tangible situation which can cause a peril to occur is called a?

• A. Hazard
• B. Physical Hazard
• C. Moral Hazard
• D. Morale Hazard

Answer: (B)

In insurance terms, a hazard is a condition that increases the chance of a loss occurring. When that condition is physical or tangible, it’s called a physical hazard. The statement describes a concrete, real-world situation—something you can see or touch—that can raise the likelihood that a peril (the actual cause of loss, such as fire, theft, or a slip and fall) will happen. Examples include icy stairs, frayed wiring, or a broken lock—situations that make loss more likely or more severe.

This is distinct from moral hazard, which involves dishonest intent or misrepresentation that affects risk, and morale hazard, which is a carelessness or passivity stemming from having insurance. Those aren't about tangible conditions that physically enable a loss, so they don’t fit the described scenario.