Which of the following is an example of a hazard?

The correct choice exemplifies a hazard because it highlights a condition or situation that increases the likelihood of loss or damage occurring. In this case, Sandra's home being located in an area of Los Angeles that frequently experiences earthquakes presents a higher risk for damage to her property. Hazards are often specific scenarios or characteristics that can lead to peril, which is the actual cause of loss.

When assessing the other options, they reflect different concepts related to risk and insurance but do not fit the definition of a hazard. For example, buying a lottery ticket does not create a risk of loss in the same manner; instead, it's a choice related to potential gain. The destruction of her home by an earthquake reflects the peril itself, rather than a hazard. Owning an exotic car, while valuable and potentially carrying insurance implications, does not inherently pose a higher risk of loss without significant context regarding how it is managed or located. The correct answer thus effectively illustrates the concept of a hazard in the realm of risk management and insurance.