Definition
In real estate, “perils” refer to events or occurrences that can cause significant damage to a property. These risks can stem from natural phenomena, accidents, or even human actions. Homeowner’s insurance typically provides coverage for a wide range of these perils, but it’s essential to note that some specific perils, like flooding from rising water, are often not covered under standard policies.
Examples
A comprehensive understanding of different perils includes recognizing some of the most common events that fall under this category:
- Fire: An accidental fire or wildfire that damages the structure of a property.
- Windstorm: Strong winds, often associated with thunderstorms or cyclones, can cause significant property damage.
- Hail: Severe hailstorms can damage roofs, windows, and other structures on a property.
- Tornado: Violent windstorms characterized by a twisting, funnel-shaped cloud that can destroy buildings and uproot trees.
- Hurricane: A powerful tropical storm with high winds and heavy rain, leading to widespread damage in coastal regions.
Frequently Asked Questions (FAQs)
Q1: Are all perils covered under standard homeowner’s insurance? A1: No, while standard homeowner’s insurance covers many common perils, it may exclude specific ones such as flooding from rising water, earthquakes, and intentional damage.
Q2: What should I do if my property is damaged by a peril not covered in my insurance policy? A2: It’s advisable to seek additional insurance policies that cover excluded perils or consider other risk mitigation strategies to protect against them.
Q3: Can I purchase additional coverage for perils not included in my standard policy? A3: Yes, insurance companies often provide add-ons or separate policies to cover additional perils like flood insurance or earthquake insurance.
Q4: What is the difference between named perils and all-risk policies? A4: Named perils insurance policies specifically list the risks covered, while all-risk (or open perils) policies cover all perils not explicitly excluded.
Q5: How can I determine the perils that pose the most significant risk to my property? A5: Conduct a risk assessment considering your geographic location, historical data of natural disasters in the area, and the structural condition of your property.
Related Terms
- Homeowner’s Insurance: A form of property insurance that covers losses and damages incurred at an individual’s residence.
- Flood Insurance: A specific insurance coverage designed to protect against flood damage, which is not covered under standard homeowner’s insurance.
- Named Perils Policy: An insurance policy that provides coverage only for the perils specifically named in the policy.
- All-Risk Policy: Also known as open perils policy, it covers all perils except those explicitly listed as exclusions.
- Risk Management: The process of identifying, assessing, and controlling threats to an organization’s or individual’s capital and earnings, including real estate risks.
Online Resources
- Investopedia - Homeowner’s Insurance
- Insurance Information Institute - Perils Covered by Homeowners Insurance
- FEMA - National Flood Insurance Program
References
- Insurance Information Institute. “What are the Common Perils Your Homeowners Insurance Policy Covers?” iii.org.
- Federal Emergency Management Agency. “National Flood Insurance Program.” fema.gov.
Suggested Books for Further Studies
- The Homeowner’s Insurance Handbook: A Guide to the Most Common Coverage by Jay P. Harman.
- Risk Management and Insurance: An Introduction to the Principles and Practices by Jo Hedesstrom and Lars-Torgil Lierke.
- Natural Hazards: Explanation and Integration by J.C. Van de Leur and V.Chisholm.
