Illinois Casualty Insurance State Practice Exam

The term that best describes a situation where the likelihood of a peril occurring is increased is "hazard." Hazards refer to conditions or situations that increase the probability of a loss due to a peril. For example, an icy sidewalk is a hazard that increases the risk of a slip and fall injury. In insurance, understanding hazards is crucial because they help insurers assess risk and determine premiums.

Indemnity pertains to a principle in insurance that seeks to restore the insured to the financial position they were in prior to the loss, without allowing them to profit from the insurance. Speculative risk involves risks that can result in either a profit or a loss, such as investing in stocks, rather than just a loss. Insurable interest is a requirement that the policyholder must have a financial stake in the insured item or life, ensuring that they would suffer a loss if the insured event occurs. None of these terms directly relate to the increased likelihood of a peril occurring, making hazard the most appropriate choice in this context.