Which term describes the actual cause of a loss?

The term that describes the actual cause of a loss is "peril." In insurance terminology, perils are events or situations that can lead to a loss. For instance, perils include risks such as fire, theft, or natural disasters like earthquakes and floods. When a peril occurs, it directly results in the damage or loss of property or assets.

Understanding this concept is crucial for insurance professionals as it allows them to accurately assess and underwrite risks associated with different types of coverage. Perils are integral to defining the scope of an insurance policy because they specify what types of loss the policy will cover.

In contrast, risk generally refers to the likelihood or chance of loss occurring, rather than the specific cause itself. Hazard relates to conditions that increase the probability of a peril occurring, while exposure refers to the extent to which a person or property is susceptible to loss. Therefore, "peril" accurately pinpoints the underlying cause that triggers the loss.