Think of a chain: a hazard makes a loss more likely or worse, a peril actually causes it, risk is the chance that it happens, and the loss is the money or injury that results.

Hazard: a condition that increases the chance of a loss or its severity. It exists before any loss happens. - Physical hazard: a physical condition of a person or property, such as uncontrolled diabetes, severe asthma or a worn stair tread. - Moral hazard: dishonesty, such as padding a claim with treatments that never happened. - Morale hazard: carelessness or indifference because "I'm insured anyway," such as a worker who stops wearing safety goggles because the health plan will pay. A hazard can raise severity alone: living hours from the nearest hospital does not cause accidents, but it can make an injury much worse.

Peril: the direct cause of a loss, such as an accident, a sickness, a fire or a fall. Accident and health insurance protects mainly against two perils: accident and sickness. - Risk: the chance or uncertainty of loss. - Loss: the final financial or bodily harm, such as medical bills or lost income. Example: a heavy smoker has a stroke and cannot work. Smoking is the hazard, the stroke is the peril, and the lost income is the loss.

California draws a line between dishonesty and carelessness (Ins. Code §533): an insurer is not liable for a loss caused by the wilful act of the insured, but it is not excused by the insured's negligence. A loss caused on purpose to collect is not paid; a careless mistake is still covered.