Which of the following best defines 'peril' in insurance terminology?

In insurance terminology, 'peril' is best defined as the causative factor of loss. This means that peril refers to the specific event or circumstance that leads to an insured loss. For example, common perils in property insurance might include fire, theft, vandalism, or natural disasters like hurricanes or floods. Understanding this definition is fundamental because identifying the peril is crucial in determining whether a particular loss is covered by an insurance policy.

The other options have their own definitions in the insurance context. Financial loss refers to the monetary impact experienced due to an event, while exposure to risk describes the potential for an adverse event occurring. A condition that increases the probability of loss might indicate factors like poor maintenance of a property or living in a flood-prone area, which makes a loss more likely but does not define the specific event causing that loss. Therefore, the definition of 'peril' focuses directly on the cause or event itself that leads to a loss, supporting the correct answer.