In insurance terms, what is referred to as the "cause of loss"?

The term "cause of loss" in insurance specifically refers to a peril. A peril is an event or a specific circumstance that leads to financial loss. This can include natural disasters like floods or earthquakes, accidents, or other incidents that can cause damage to property or personal injury. Understanding perils is crucial for insurance as they determine what kinds of losses are covered under a policy.

For example, homeowners insurance typically covers damages caused by perils such as fire, theft, and vandalism. The identification of perils is fundamental for both insurers and consumers to comprehend the risks associated with a particular policy. Knowing the types of perils covered helps find suitable coverage for one's circumstances and mitigates the financial impact of unforeseen events.