What represents a cause of loss that is covered by an insurance policy?

In the context of insurance policies, a peril is defined as an event or occurrence that can cause damage to property or loss. Understanding this term is crucial because it directly relates to what risks an insurance policy will cover. For instance, common perils include fire, theft, and natural disasters. When a policyholder experiences a loss due to one of these events, the insurance policy typically provides financial protection against that specific peril.

Hazard refers to a condition or situation that increases the likelihood of a peril occurring but doesn't itself cause a loss. For example, an unmaintained electrical system can present a hazard that may lead to a fire, which is a peril.

Exposure relates to the measure of risk or potential loss; it represents how much risk a policyholder is subject to. Retention involves the idea of assuming responsibility for certain risks or losses and typically refers to self-insuring for some amount of loss.

In summary, perils are the actual events that lead to loss and are covered by the insurance policy, making them the key focus for understanding what is protected under an insurance contract.