Washington Life Producer Practice Exam

The term that signifies an event or condition increasing the probability of an insured's loss is a hazard. Hazards can be classified into physical hazards, moral hazards, and morale hazards, each of which contributes to the likelihood of a loss occurring. For example, a slippery floor in a store is a physical hazard that might increase the chance of a slip-and-fall accident.

Understanding the different types of hazards helps insurance professionals identify and assess risk more effectively, leading to better underwriting decisions and more accurately priced insurance products. This distinction is crucial in the field of insurance because recognizing the existence of hazards allows insurers to implement measures to mitigate those risks, ultimately protecting both the insured and the insurer's financial interests.

The other terms present in the choices refer to broader concepts of risk and coverage: risk is the uncertainty regarding a loss, exposure refers to the measure of risk an insured has, and a claim is a request for payment based on a loss that has already occurred. These concepts are important in insurance but do not specifically define the conditions that directly increase the likelihood of loss like a hazard does.