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In the insurance world, a peril has a very particular meaning: a specific cause of damage or injury. Insurance policies exist to cover you against specific perils like fire, wind and theft. However, some perils (like water damage) are covered only in certain situations, and others (like neglect) are excluded from insurance entirely.
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 particular perils is one of the main reasons to buy insurance for your home, in addition to liability protection.
All Peril vs Named Peril Coverage
Nearly every homeowners insurance policy protects against multiple perils, but some homeowners insurance policies only cover specifically named perils on their policies. This is called named-peril coverage, also known as closed-peril insurance, specified-perils insurance or a named-risk policy. Meanwhile, a policy that will reimburse you for all causes of damage besides specific exceptions is called all-peril coverage. This type of coverage is sometimes referred to as open-peril, special-perils or all-risks coverage.
For HO-3 insurance policies, which are the most common type of homeowners insurance, the structure of your home and your personal property are insured differently. The structure of your home is protected against open perils, while your property is only covered from things specifically described 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 colloquial 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' 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 can be used to describe the portion of a home insurance policy that covers your dwelling from perils.
Perils Commonly Covered By Insurance
There are 16 basic peril types that are commonly covered by a "named perils" insurance policy. However, this isn't a universal list. Exactly what is or isn't covered in your policy can vary based on your insurance company, your location and the type of insurance policy you bought, so it's essential you read your own policy in detail to know what it covers. They are sometimes called "perils insured against," and you can usually find yours in the "Perils Insured Against" section of your homeowners or renters insurance policy. For example, in some coastal areas, wind damage may not be included by default and will require a separate endorsement. And if you have an open perils policy, that means you won't have any perils listed; only exceptions.
Example List of Insurance Perils
- Riot/civil commotion
- Vandalism/malicious mischief
- Falling objects
- Weight of ice, snow, sleet
- Accidental discharge/overflow of water or steam
- Sudden tearing apart, cracking or bulging (in water/air systems)
- Damage from electrical current
- Volcanic eruption
Perils Not Typically Covered By Property Insurance
Insurance policies always name specific exceptions to a policy—perils that are not covered. As with covered perils, things that aren't covered will vary by insurer and where you live, but many named exceptions are common across all insurers.
Additionally, you can protect yourself against some perils, like 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, like neglect, can't be covered by insurance at all.
Example List of Excluded Insurance Perils
- Earth movement
- Water (flood, sewer backup)
- Power failure
- Nuclear hazard
- Intentional loss
- Governmental hazard
All Perils Car Insurance
In the realm of car insurance, all perils is sometimes used as another way to describe comprehensive coverage. Comprehensive coverage pays for financial loss involving your vehicle so long as it's not the result of a collision. Things covered by all perils car insurance include theft, fire, falling objects and more. Collision coverage even includes some perils not covered under typical home peril insurance, like earthquakes and flood damage.
Collision coverage is usually optional for car insurance—there are no states that require you to have it in order to drive. However, you may need to carry it if you have a lease or a loan on your car. Many lenders require collision coverage while you're still paying off the vehicle.