Which term refers to a cause for loss?

The term that refers to a cause for loss is "Peril." In the context of insurance, a peril is a specific event or situation that can lead to a financial loss. Examples of perils include fire, theft, flood, and collision. Understanding perils is crucial for both insurers and insureds because it helps determine what risks are covered under an insurance policy and what losses the insurer is obligated to compensate.

In contrast, the other terms represent different concepts in the insurance field. The loss ratio is a measure of the losses incurred by an insurer compared to the premiums earned, primarily used for assessing the profitability of an insurance company. Pure risk refers to situations that only present the possibility of loss or no loss, but no potential for gain. Indemnity refers to the principle of restoring the insured to the financial position they were in prior to the loss occurring, by compensating them for their loss up to the policy limit. Understanding these terms helps clarify the specific role of perils in the insurance framework, focusing on causes of loss rather than the financial implications or types of risk.