What Is an Insurance Peril?

A peril is a specific cause of damage or injury in the insurance industry. Certain perils, such as fire, wind, and theft, are covered by insurance policies. However, some perils, such as water damage, are only covered in certain circumstances, while others, such as neglect, are completely excluded from coverage.

Types of perils in home insurance

A peril is a specific cause of property or person damage or injury. In addition to liability protection, one of the main reasons to purchase home insurance is to protect yourself against financial loss from specific perils.

All peril vs. named peril coverage

Almost every homeowners insurance policy protects against multiple perils, but some policies only cover specific perils on their policies. This is known as named-peril coverage, which is also referred to as closed-peril insurance, specified-perils insurance, or a named-risk policy.

Meanwhile, all-peril coverage refers to a policy that reimburses you for all causes of damage, with certain exceptions. This type of coverage is also known as open-peril, special-peril, or all-risks coverage.

The structure of your home and your personal property are insured separately under HO-3 insurance policies, which are the most common type of homeowners insurance. Your home's structure is protected against open perils, but your property is only covered for things specifically mentioned in your policy.

Insurance forms and the perils they cover

How peril, hazard and risk differ

The words peril, hazard, and risk all have similar meanings in colloquial English and are sometimes used interchangeably. When it comes to insurance, however, they have very specific — and distinct — definitions that relate to one another. Consider the following example:

The wildfire is an example of a peril in this scenario: something that can cause damage to your home. And the low-hanging brush is dangerous because it increases the likelihood that a hazard will cause damage to your home. The likelihood that a specific peril, or set of perils, will cause damage to you or your property is referred to as risk.

Hazard insurance is sometimes used to describe the portion of a home insurance policy that protects your home from perils.

Perils commonly covered by insurance

A "named perils" insurance policy typically covers 16 different types of perils. However, this is not a comprehensive list. What is and isn't covered in your policy can vary depending on your insurance company, location, and the type of insurance policy you purchased, so it's critical to read your policy thoroughly and understand what it covers.

• You can usually find yours in the "Perils Insured Against" section of your homeowners or renters insurance policy. Wind damage, for example, may not be included by default in some coastal areas and will require a separate endorsement. And if you have an open perils policy, no perils will be listed; only exceptions.

Sample list of insurance perils

• Fire/lightning
• Windstorm/hail
• Explosion
• Riot/civil unrest
• 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
• Electrical current damage
• Volcanic eruption

Perils not typically covered by property insurance

Insurance policies always specify specific exceptions — perils that are not covered. Things that aren't covered, like covered perils, vary by insurer and location, but many named exceptions are common across all insurers.

You can also protect yourself against certain perils, such as flooding, by purchasing a rider, endorsement, or supplementary policy.

• For example, you can purchase catastrophe insurance, also known as "cat perils," which provides coverage for windstorms, floods, and earthquakes. Other exceptions, such as neglect, are not covered at all by insurance.

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 peril car insurance

In the world of auto insurance, "all peril" is another term for "comprehensive coverage." Comprehensive coverage compensates you for financial losses caused by your vehicle that are not the result of a collision.

Theft, fire, falling objects, and other perils are all covered by all peril car insurance. Collision coverage even includes perils not covered by standard home insurance, such as earthquakes and flood damage.

Collision coverage is typically optional for auto insurance — no state requires it in order to drive. However, if you have a lease or a loan on your car, you may be required to carry it. While you're still paying off the vehicle, many lenders require collision coverage.