What term describes the cause of loss in an insurance policy?

The term that describes the cause of loss in an insurance policy is 'Peril.' In insurance terminology, a peril refers to specific risks or events that can cause damage or loss, which the insurance policy may cover. Examples of perils include fire, theft, flood, and natural disasters. Understanding perils is crucial for both the insurer and the insured, as it determines what kinds of damages will be compensated under the policy.

In contrast to perils, the other terms have different meanings in the context of insurance. 'Risk' relates to the uncertainty of financial loss, which can arise from various perils. 'Exposure' refers to the extent to which a person or entity is subject to risk of loss, reflecting the likelihood that a peril may result in a claim. 'Liability' involves the legal obligation to compensate for damages or injuries caused to another party, distinguishing it from the concept of perils, which focus on the events triggering the loss itself.