What does "peril" in insurance terms refer to?

In insurance terms, "peril" specifically refers to an event or occurrence that can cause damage or loss, which poses a risk to the insured property or person. It is essentially the risk factor that gives rise to potential claims under an insurance policy, such as fire, theft, or natural disasters.

Understanding peril is crucial because it identifies the specific causes of loss that an insurer will cover. Policyholders select their insurance based on the types of perils they wish to protect against, and policies are often classified as named peril or all-risk.

The other choices focus on different aspects of insurance practice. The financial consequence of a claim pertains to the outcome of a peril, while depth of coverage refers to how much risk is insured against within a policy. The act of filing an insurance claim is a procedural step that occurs after a peril has resulted in a loss. Therefore, while all these terms are related to the insurance process, they do not define “peril” itself as accurately as the first choice does.