In property insurance, what best describes perils?

• A. The insured's negligence
• B. The causes of loss, such as fire, theft, windstorm
• C. The policy exclusions
• D. The insured's misrepresentation

Answer: (B)

Perils are the events that can cause a loss that the policy will respond to. In property insurance, the coverage is tied to these causes of loss—the events the insurer agrees to pay for—such as fire, theft, or windstorm. Some policies list specific perils that are covered (named perils), while others cover all risks except for explicit exclusions (open or all-risk policies). The important idea is that a peril is the source of the loss, not the fault of the insured or a policy rule.

The other ideas don’t describe perils themselves. The insured’s negligence isn’t a peril; it’s a factor that can influence coverage in some situations, but the loss would be tied to the peril causing the damage, not the negligence as the peril. Policy exclusions describe what isn’t covered, not the events that cause covered losses. Misrepresentation is an underwriting issue used to determine eligibility or premium, not a peril.

So the best description is: the causes of loss, such as fire, theft, windstorm.