Perils & Hazards
Perils
MR. WATSON: What is a peril ?
STUDENT: Apparel is clothing.
MR. WATSON: Scotty, beam her up! A peril. It's the event that causes loss.
MR. WATSON: Insurance companies are going to insure against financial loss due to certain perils occurring. If a building burns, what's the peril ? Fire. If a boat sinks, what's the peril ? The sinking. It's the event that causes a loss.
STUDENT: It's a noun. Right? It's a noun?
MR. WATSON: Guys, I'm just a country boy from Two Egg, Alabama. Man.
STUDENT: I'm curious.
MR. WATSON: Yes, it's a noun.
MR. WATSON: "Peril" would be the danger. Do you agree? The peril is the event.
MR. WATSON: So the insurance company is going to have to pay out due to certain events occurring. Do you agree?
STUDENTS: Yes.
Hazards
MR. WATSON: We are also concerned with hazards . What are hazards ?
MAN: Potential perils.
MR. WATSON: Nope. Hazards are things that increase the chance of a peril happening. There are three types of hazards .
- Physical - blind, deaf
- Moral - lifestyles, lying, cheating
- Morale - attitude of indifference
Physical
MR. WATSON: Give me an example of a physical hazard.
STUDENT: Jumping from a plane without a parachute.
MR. WATSON: Without a parachute?
STUDENT: With a parachute.
MR. WATSON: Same thing. What about a one-eyed pilot? Slippery roads, faulty wiring. Those are all physical hazards. Blindness or being deaf.
Moral
MR. WATSON: What about a moral hazard? What do you think morals are? It's that thing inside of you telling you that it is wrong or it's right. Lying, stealing, cheating, those are moral deficiencies. Lifestyles.
MR. WATSON: You can tell by the way I talk that I'm from the south. Right? I mean, make no mistake. Ex. Here's my best friend. I forgot your name, friend.
STUDENT: Kelly.
MR. WATSON: It's Kelly. We're playing poker, and the dude here (Mr. Watson pointing to a male student) whips out five aces. Somebody is going to die. Do you agree? Somebody is cheating, somebody is going to die. The hazard is him cheating, the peril is me shooting him, old west style.
(Laughter.)
MR. WATSON: So moral hazards can increase the chance of a peril happening. Does that make sense? Yes or no?
STUDENTS: Yes.
Morale
MR. WATSON: What about morale? "Moral" - with an E on the end.
MR. WATSON: Morale is attitude. It's a state of mind causing indifference. Morale with an "E" on the end of the word equals attitude.
MR. WATSON: Driving recklessly in and out of traffic would be a physical hazard. And again, a hazard increases the chance of a peril. Does everybody agree?
STUDENTS: Yes.
MR. WATSON: But your attitude, your attitude affecting other drivers would be either "good morale" or "bad morale". What about the Miami salute when the guy gives you the one finger? What kind of attitude does the guy have? Bad attitude. Do you agree? So an insurance company is going to look at your driving record to see if you have a slew of reckless driving tickets or speeding tickets to measure your morale. If you do, the insurance company might determine that you just don't care. The company will look at all these things (physical, moral and morale) to see if these increase their risk. To determine whether or not they will insure you is the question.
MR. WATSON: Maybe I am driving recklessly as well. I am trying to get my brother to the hospital because he's having a heart attack. I am cutting in and out of traffic. At the same time I'm waving at you, attempting to say I am sorry for driving so aggressively; however, I continue to run red lights and weave in and out of traffic just to get past you. I am still creating a physical hazard by driving recklessly, but my morale, my attitude is good. I certainly care about the other drivers. I probably won't drive like that again. My morale, my attitude towards others is good. This is an example of what insurance companies look at. Does that make sense?
STUDENTS: Um-hmm.
MR. WATSON: Does everybody understand these three? Yes or no.
STUDENTS: Yes.
MR. WATSON: Alcoholism and drug addiction are examples of what type of hazard?
STUDENTS: Moral hazards.
MR. WATSON: Ding, ding, ding, ding, ding!!! Moral hazards.
A bad attitude, which one is that?
STUDENTS: Morale.
MR. WATSON: You got it!
So once again, we are concerned with financial loss. Insurance companies are going to look at different hazards that increase the chance of a peril happening.
MR. WATSON: Hazards are things that increase the chance of a peril happening.
- Physical
- Moral
- Morale