What Is an Insurance Peril?
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In insurance, a peril has a very particular meaning: a specific cause of damage or injury. Insurance policies exist to cover you against certain perils, such as fire, wind and theft. However, some perils, such as water damage, are covered only in certain situations or excluded entirely, such as neglect.
Types of perils in home insurance
A peril is a specific cause of damage or injury to a piece of property or person. Protecting yourself against financial loss from perils is one of the main reasons to buy home insurance, in addition to liability protection.
All perils vs. named perils coverage
Nearly every homeowners insurance policy protects against multiple perils, but some only cover specifically named perils. This selective coverage is called "named perils coverage," also known as closed peril insurance, specified perils insurance or a named risk policy.
Meanwhile, a policy that reimburses you for all causes of damage besides specific exceptions is called all-perils coverage — sometimes called open peril, special perils or all risks coverage.
For HO-3 insurance policies, the most common type of homeowners insurance, the structure of your home and your personal property are insured in different ways. The structure is protected against open perils, while your property is only covered from things named in your policy.
Insurance forms and the perils they cover
Insurance form | Home structure | Personal property |
|---|---|---|
| HO-2 | Named perils only | Named perils only |
| HO-3 | Open perils | Named perils only |
| HO-4 (renters insurance) | Not applicable | Named perils only |
| HO-5 | Open perils | Open perils |
How peril, hazard and risk differ
In everyday English, the words peril, hazard and risk all have similar meanings and can sometimes be used interchangeably. But when it comes to insurance, they have very specific — and different — definitions that relate to one another. Consider this example:
The low-hanging brush increased the risk of a wildfire destroying James's home.
In this scenario, the wildfire is an example of a peril — something that can damage your home. And the low-hanging brush is a hazard: It increases the likelihood that a peril will cause damage to your home. Risk describes the likelihood that a specific peril, or perils overall, will cause damage to you or your property.
Sometimes, the phrase hazard insurance is used to describe the portion of a home insurance policy that covers your dwelling from perils.
Perils commonly covered by insurance
A named perils insurance policy typically covers 16 basic types of perils. However, this isn't a universal list. Exactly what is or isn't covered in your policy can vary by your insurance company, location and type of insurance policy. It's essential to read your policy in detail to know what it covers.
You can usually find your covered perils listed in the "perils insured against" section of your homeowners or renters insurance policy. For example, wind damage may not be included by default in some coastal areas and will require a separate endorsement. But if you have an open perils policy, only exceptions will be listed.
Sample list of insurance perils
- Fire/lightning
- Windstorm/hail
- Explosion
- Riot/civil commotion
- Aircraft
- Vehicles
- Smoke
- Vandalism/malicious mischief
- Theft
- Falling objects
- Weight of ice, snow, sleet
- Accidental discharge/overflow of water or steam
- Sudden tearing apart, cracking or bulging (in water/air systems)
- Freezing
- Damage from electrical current
- Volcanic eruption
Perils not typically covered by property insurance
Insurance policies always name exceptions to a policy — specific perils that are not covered. As with covered perils, things that aren't covered vary by company and where you live, but many named exceptions are common across all insurance companies.
Additionally, you can protect yourself against some restricted perils, such as flooding, by purchasing a rider, endorsement or supplementary policy.
For example, you can buy catastrophe insurance, or "cat perils," which includes protection from windstorms, floods and earthquakes. But other exceptions, such as neglect, aren't covered by insurance at all.
Sample list of excluded insurance perils
- Ordinance/law
- Earth movement
- Water (flood, sewer backup)
- Power failure
- Neglect
- War
- Nuclear hazard
- Intentional loss
- Governmental hazard
All perils car insurance
In the realm of car insurance, "all perils" is sometimes used to describe comprehensive coverage, which pays for damage to your vehicle not caused by a collision.
All perils car insurance covers theft, fire, falling objects and more. Collision coverage even includes some perils not covered under typical home insurance, such as earthquakes and flood damage.
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