Which term refers to the potential causes of loss, such as accidents, fire, and theft?

The term that refers to the potential causes of loss, such as accidents, fire, and theft, is "Peril." In insurance terminology, a peril is specifically defined as an event or circumstance that can lead to financial loss. For instance, in a homeowners insurance policy, perils covered may include fire, water damage, theft, and natural disasters. Understanding perils is crucial because they are the basis upon which insurance policies are built; they define what is insurable and what risks are covered under a policy.

In contrast, the other terms serve different purposes in the field of insurance. "Loss" refers to the actual financial damage or expense incurred due to a peril. "Hazard" relates to conditions that increase the likelihood of a peril occurring but are not threats themselves. Lastly, "Liability" refers to legal responsibility, particularly in terms of financial obligation for harm or injuries caused to another person. Each of these terms plays a distinct role in the understanding of insurance concepts, emphasizing the importance of knowing what a peril means in the context of risk management and coverage.