Peril
A specific risk or cause of loss covered by an insurance policy, such as fire, theft, windstorm, or vandalism. Insurance policies typically list covered perils explicitly or cover all perils except those specifically excluded.
Example
“After reviewing her homeowner's policy, Maria discovered that flood was not a covered peril, so she purchased separate flood insurance to protect against water damage.”
Memory Tip
PERIL = Potential Event Requiring Insurance Loss coverage - each peril is a specific danger your policy addresses.
Why It Matters
Understanding which perils are covered determines what losses your insurance will pay for and which ones leave you financially vulnerable. Knowing your covered perils helps you identify gaps in protection and decide whether additional coverage is needed for specific risks.
Common Misconception
Many people assume their insurance covers all possible dangers, but policies only cover specifically listed perils or exclude certain ones. Common excluded perils like floods, earthquakes, or wear and tear often surprise policyholders who discover these gaps only when filing a claim.
In Practice
David's homeowner policy covers 16 named perils including fire, theft, and windstorm, but excludes flood and earthquake. When a kitchen fire causes $35,000 damage, his insurance pays the full claim minus his $1,000 deductible. However, when an earthquake cracks his foundation causing $15,000 damage, he receives no coverage because earthquake isn't a covered peril under his standard policy.
Etymology
From Old French 'peril' and Latin 'periculum' meaning 'danger' or 'risk,' related to 'experiri' meaning 'to try' or 'test.'
Common Misspellings
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See Also
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