Georgia Property & Casualty Practice Exam

Which term do insurers sometimes use to refer to the insured person or property?

1. Exposure

2. Hazard

3. Peril

4. Risk

The correct answer is: Risk

In the context of insurance, the term "risk" is commonly used to refer to the insured person or property. Specifically, it embodies the idea of uncertainty associated with potential losses that the insurer is agreeing to cover. When an insurer evaluates a policy, they assess the risk posed by the insured individual or property, influencing the premiums charged and the terms of coverage provided. Defining risk in this manner is crucial for both the insurer and the insured. It represents not just the possibility of loss but also the characteristics of the person or property that could lead to claims. By understanding risk, insurers can more effectively manage their portfolios and individuals can understand what factors might affect their coverage. Other terms like exposure, hazard, and peril relate to different concepts within insurance. Exposure pertains to the extent to which the insured is subjected to possible loss, while hazard refers to something that increases the likelihood of a loss occurring. Peril is the cause of a potential loss, such as fire or theft. Thus, while these terms are significant in the insurance landscape, "risk" specifically addresses the insured entity within this framework.