IC Non-Life Insurance Agent's Practice Exam 2025 - Free Non-Life Insurance Practice Questions and Study Guide

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Define "peril" in insurance terminology.

An unexpected financial gain

A specific event that may cause a loss

In insurance terminology, "peril" refers to a specific event or situation that has the potential to cause a loss. This could include events such as fire, theft, flood, or natural disasters. Understanding perils is essential for both insurers and policyholders because insurance policies are designed to protect against specific risks, which are classified as perils. When a policyholder files a claim, they must demonstrate that a covered peril led to their loss, forming the basis for the insurer's responsibility to compensate for that loss. This concept is fundamental to risk assessment and management within the insurance industry, allowing for tailored coverage that addresses the specific dangers a policyholder may face.

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A routine safety inspection

A type of insurance policy

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