What are physical hazards primarily associated with?

Physical hazards are primarily associated with external physical conditions surrounding property. This option accurately encapsulates what physical hazards entail, as they refer to environmental factors or conditions that can increase the likelihood of a loss occurring. Examples of physical hazards include slippery conditions due to ice, proximity to bodies of water that could cause flooding, or unsafe building structures that could collapse.

In contrast, the other choices focus on different aspects that are not tied to physical hazards. Behavioral characteristics of individuals deal with the actions and choices of people, which are categorized under moral hazards. Legal conditions involve regulations and constraints around insurance agreements but do not pertain directly to the physical environment. Financial statements of an insured relate to the financial stability and risk profile of an individual or business, which is a completely different aspect from physical hazards. Thus, B encapsulates the essence of physical hazards effectively.