The replacement value is the cost to replace the article at this point in time. Namely this is higher than the original price you paid because of inflation. In the case of a motor vehicle its market value would be the replacement cost less an allowance for wear and tear. No allowance is made for sentimental value to its owner. Principles of insurance.
Risk is a measurement of the likelihood of an undesirable event occurring.
This is borne out in terms of the premium to be paid. The higher the risk, the higher the premiums. A peril is a potential cause of loss, such as fire or theft. A hazard is a state of affairs which may increase the risk arising from a particular peril. 3.2 Insurable interest.