Ace the 2026 RIBO Exam – Boost Your Insurance Broker Swagger!

The primary definition of a peril in insurance terminology is indeed a cause of loss. In the context of insurance, a peril refers to the specific event or circumstance that can lead to damage or loss of property or personal injury. For example, common perils include fire, theft, flood, and natural disasters. Understanding perils is crucial because insurance policies typically provide coverage against certain designated perils, and knowing these helps both insurers and insureds assess risk and determine the terms of the policy.

The other options do not accurately define peril. The term "policyholder" refers to the individual or entity that owns an insurance policy, while "insurance premium" refers to the amount of money paid for coverage under a policy. "Legal liability" pertains to the responsibility or obligation to compensate others for damages incurred, which is a separate concept from the causes of loss outlined in insurance agreements. Thus, associating the term peril exclusively with causes of loss is essential for anyone involved in insurance to understand.