What term describes the cause of loss that is insured against in an insurance policy?

The term that describes the cause of loss that is insured against in an insurance policy is known as a peril. Perils refer to specific risks or events that can cause financial loss, and they are clearly outlined in an insurance policy. For example, common perils covered in homeowners' insurance include fire, theft, and vandalism. Understanding perils is critical because they determine what types of incidents the insurance coverage will respond to and provide compensation for.

In contrast, the other terms play different roles in the realm of insurance. A claim is a request made by the policyholder to the insurance company for payment based on losses covered by the policy. Risk refers to the uncertainty of loss occurring; it encompasses the possibility of loss from various perils. A hazard, on the other hand, indicates conditions that increase the likelihood or severity of a loss but are not the loss itself. Together, these concepts form the foundation of understanding how insurance works, but when identifying the specific term for the cause of loss that the insurance policy covers, peril is the appropriate choice.