Define "peril" in insurance terminology.

In insurance terminology, "peril" refers to a specific event or situation that has the potential to cause a loss. This could include events such as fire, theft, flood, or natural disasters. Understanding perils is essential for both insurers and policyholders because insurance policies are designed to protect against specific risks, which are classified as perils. When a policyholder files a claim, they must demonstrate that a covered peril led to their loss, forming the basis for the insurer's responsibility to compensate for that loss. This concept is fundamental to risk assessment and management within the insurance industry, allowing for tailored coverage that addresses the specific dangers a policyholder may face.