Which term defines anything that increases the chance of loss?

• A. Exposure
• B. Risk
• C. Hazard
• D. Liability

Answer: (C)

The term that defines anything that increases the chance of loss is "hazard." Hazards are conditions or situations that create or increase the chance of an insured event occurring. In the context of insurance and risk management, a hazard might include factors such as unsafe driving, a poorly maintained property, or any behavior that elevates the potential for a claim.

Understanding hazards is crucial because they directly influence the underwriting process and the risk assessment of insurance policies. Effective risk management involves identifying and mitigating hazards to lower the chance of loss. For instance, implementing safety measures can help reduce hazards and, consequently, the risk associated with a particular activity or insured asset.

In contrast, "exposure" refers to the potential for loss, while "risk" encompasses the possibility of a loss occurring. "Liability" involves legal responsibility for damages resulting from actions or negligence. Each of these terms has a distinct definition, with hazards specifically targeting the factors that contribute to increased risk of loss.