General insurance Risk and Related Concept

[Mataracy]

Risk is sometimes confused with peril and the two are usually used interchangeably. Peril is the source of loss as distinct from the uncertainty of loss.
A fire, an earthquake, draught,flood,theft and so on are sources from which losses emerge. They are perils that give rise to risk but not risk themselves.

Risk is usually confused with hazards, hazard is the condition or features that increase the likelihood or severity of a loss. It can either be physical or moral hazard.
A physical hazard had to do with the location, use and make if the property (subject matter of insurance).
If a farm is located bear a river or stream, there is the likelihood of flood during the raining season and if it is located on hill ur rock, there is the likelihood of draught when there is either insufficient or no rain.
Also if the farm is isolated, pests and diseases can affect it.

A moral hazard has to do with the character or attitude if individual towards handling a risk. A farmer that smokes can set the farm on fire during dry season.

 

[Mandy96]

I totally agree with you on this point you made. Any risk that will be taken has to come with some concept. I mean If you are going to take a risk then you must know the consequences of The risk you are about to take because you know find out if the risk is worth taking.

 

[btaliat]

Thanks for the clarification. But I am a little bit confirmed about peril and hazard. It seems both concepts are interwoven. If peril is the source of risk, and hazard is what give rise to risk, I mean what makes risk being vulnerable. It means there won't be peril if there is no hazard or vice versa.

 

[Lens1000]

You have explained the difference between risk and peril in clear terms without mincing words. Peril is truly the source of risk. It could be fire, flood etc. as you have rightly pointed out. Insurance as a whole is way of removing responsibilities off your shoulders. The insurance company is the risk taker. They manage the risk on your behalf.

 

[Mataracy]

Thanks for the clarification. But I am a little bit confirmed about peril and hazard. It seems both concepts are interwoven. If peril is the source of risk, and hazard is what give rise to risk, I mean what makes risk being vulnerable. It means there won't be peril if there is no hazard or vice versa.

You are very correct and int

 

[Mataracy]

You are very correct and int

I mean that you are very correct and intact. Hazard is what give rise to the peril because ; hazard serve like fuel that increases the chance of it to happen. Hazard make it more dangerous for incident to occur the more. Take for example; A man selling gas who now allowed somebody like wielder man ( somebody using fire to work) to be working beside his shop has already increases the chance of the incident to occur. Which has make that gas filling station more hazardous (prone) to risk.