Which of the following principles describes creating or increasing the chance of loss?

The principle that describes creating or increasing the chance of loss is known as hazard. In the context of insurance and risk management, a hazard refers to a condition or situation that increases the likelihood that a loss will occur. Hazards can be physical, like a wet floor that could lead to a slip and fall accident, or they can be related to behavior, such as reckless driving that raises the chance of an auto accident.

Understanding hazards is critical because they help insurers assess the level of risk associated with insuring a particular individual or property. By identifying and managing hazards, insurers can better mitigate potential losses and set appropriate premiums. This principle is fundamentally aligned with the broader concept of risk, which encompasses both the chance of loss and the impact of that loss, but hazard specifically zeroes in on the factors that elevate that risk.

Indemnity relates to compensating for loss, warranty refers to guarantees related to property condition, and risk is the overall threat of loss, but hazard specifically indicates conditions that directly contribute to an increased likelihood of experiencing that loss.