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What is the difference between a peril and a hazard?

A peril is something that can cause a loss. Examples include falling, crashing your car, fire, wind, hail, lightning, water, volcanic eruptions, choking, or falling objects.


A hazard is any condition or situation that makes it more likely that a peril will occur. Hazards include:

  • physical hazards, like ice on the sidewalks, smoking, or skydiving;
  • moral hazards (most of which are avoidable), like dishonesty (such as burning down the warehouse when your company goes bankrupt to collect insurance money or buying insurance on someone with yourself as beneficiary and then killing them); and
  • morale hazards, like a careless attitude since "insurance will pay for it."




Brenda Procter, M.S.,  Consumer and Family Economics, College of Human Environmental Sciences, University of Missouri-Columbia









If you'd like to learn more about this and other personal finance topics, the University of Missouri offers 'Personal & Family Finance,' a correspondence course, through the Center for Distance and Independent Study (800-609-3727). Information about this course is available at





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Last update: Sunday, July 20, 2008




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