What term describes the uncertainty or chance of loss in insurance?

The correct term that describes the uncertainty or chance of loss in insurance is "risk." In the context of insurance, risk refers to the potential for a loss to occur, which provides the basis for the insurance coverage. Insurers assess risk when determining policy premiums and coverage because they need to evaluate the likelihood of claims being filed and the financial implications of such claims.

When discussing insurance concepts, peril refers to the specific cause of loss, such as fire or flooding, rather than the overall uncertainty. Indemnity describes the compensation or reimbursement for the loss sustained, and depreciation refers to the reduction in value of an asset over time. Understanding risk is fundamental in the insurance industry, as it shapes how policies are designed and how insurers evaluate their exposure to losses.