In insurance, a physical hazard is any tangible characteristic of property, people, or activities that increases the probability of loss due to a peril. These hazards are related to the physical condition of the property or people and can contribute to the likelihood and severity of a loss.
Examples of physical hazards include:
• Faulty wiring that increases the likelihood of a fire
• Slippery floors that increase the likelihood of a slip and fall accident
• Defective machinery that increases the likelihood of an accident or injury
• Proximity to flood-prone areas that increases the likelihood of flood damage
Key features of physical hazards in insurance include:
• They are tangible characteristics that are visible or measurable.
• They increase the likelihood of loss due to a peril.
• They can affect the severity of a loss.
• They can be mitigated or eliminated through risk management techniques such as repairs, maintenance, or protective measures.
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