Defective Wiring: Hazard, Peril, or Risk in Property Safety

Posted on Jan 22, 2026 in Physical Activity and Sports Sciences

Understanding Risk Management Terminology

When discussing property insurance and safety, it is crucial to distinguish between key terms like hazard, peril, and risk. These concepts define how potential losses are categorized and managed.

Classifying Defective House Wiring

Consider the following multiple-choice question related to property safety and insurance principles:

Multiple Choice Question

Defective house wiring is an example of a:

• hazard.
• peril.
• risk.
• speculation.

Answer and Explanation

The correct answer is hazard.

A hazard is a condition or situation that increases the probability or severity of a loss arising from a peril. Defective wiring does not cause the fire itself (the fire is the peril), but it significantly increases the likelihood that a fire will occur.

Key Definitions

• Peril: The actual cause of loss (e.g., fire, theft, windstorm).
• Hazard: A condition that increases the chance of a peril occurring (e.g., defective wiring, slippery floor, poor maintenance).
• Risk: Uncertainty concerning the occurrence of a loss.
• Speculation: Engaging in risky business transactions in the hope of making a quick profit.