What describes a condition that could increase the probability of loss?

A hazard refers to any condition or situation that increases the likelihood of a loss occurring. In insurance terminology, it encompasses various factors that could enhance risk exposure, such as environmental factors, behaviors, or property conditions that compromise safety. For example, an inadequately maintained property presents a higher chance of damage, thus resulting in an increased probability of loss.

Understanding hazards is crucial for insurers as they assess risk and determine appropriate premiums, coverage limits, and policy terms. By identifying and managing hazards, both insurers and policyholders can work towards reducing overall risk and minimizing potential claims. This concept is fundamental to the practice of underwriting and risk management in the insurance industry.