Relates to the physical character of the risk.

Examples are as follows:

1. A physical hazard of a motor policy is where the insurers will apply a higher premium to a vehicle which is classed as a high performance car.
2. A physical hazard under a household is where an insurer will apply a higher premium or reduce cover if the house has a flat felt  roof or a portion of the roof is a flet felt roof.
3. A person trying to purchase travel insurance whilst suffering with a terminal illness. Insurers will exclude the pre-existing illness.