What is Peril?
A peril is any specific risk or event that can damage or lose property, such as fire, theft, storms, or accidents. Understanding perils is crucial for determining what risks are covered under a personal and business insurance policy.
Insurance policies typically categorize perils into two types: named perils and open perils. Named perils are specific risks listed in a policy that are covered, such as fire or vandalism. Open perils cover all risks except those specifically excluded, offering broader protection. For example, a homeowner’s insurance policy might cover perils like windstorms or lightning while excluding events like earthquakes or floods unless additional coverage is purchased.
Understanding which perils are covered in your insurance policy is essential for ensuring your assets are protected in the event of damage or loss. It is especially important in areas prone to natural disasters, where certain perils may require additional coverage.