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    Insurance Perils and Hazards

    The definition of a peril is, “the cause of a potential loss”.
    The definition of a hazrd hazard is, “the condition  which increases the risk or seriousness of a loss”.

    There are four types of hazards known to the insurance professional.

    Physical hazards are the first which include hazards which arise from structural or operational features of the situation.  For example a slippery floor or a huge tree branch in the middle of the road would be classified as a physical hazard.

    Moral hazards come from a person’s habits and values.  The attempt to create a loss for the purpose of collecting from an insurance company is a moral hazard.  Another moral hazard is the filing of a false claim.  Also, every day someone sets themself up to be the victim of an auto theft.  In many cases this is done just to avoid the next monthly car bills which the driver cannot afford.  This is a very common moral hazard which may result in prison time for the one who makes that attempt.

    Morale harzards come from carelessness or irresponsibility.  An example of a morale hazard is When some driver flies into oncoming traffic while trying to reach their dropped cell phone.  Another morale hazard I heard about in a traffic course was that of a teenager driving while attempting to apply visine.

    Lastly there are legal hazards which arise from court actions that increase the likelihood or amount of loss.  Legal hazards will continue to increase as more people file lawsuits for large rewards.

    To get a lower insurance rate the insured must do what they can to minimize any of these mentioned risks or hazards.  This can be done in many ways.  Drive a slower sedan instead of the fast hot rod.  Always drive safely.  If you want to lower your homeowners insurance rate avoid buying high risky toys like trampolines or swimming pools.  Join a health club and get into shape.  Eat healthy.  Make a list of things you feel may increase your risks on and off the road. Try to avoid these habits on a daily basis.

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