A specific risk or cause of loss that is included in an insurance policy. Fire, theft, windstorm, and hail are common covered perils in homeowners insurance. If a loss is caused by a peril not listed, the claim may be denied unless you have an open peril policy.
Related Terms
Exclusion
A specific condition, situation, or circumstance that is not covered by an insurance policy. Common exclusions include flood damage on standard homeowners policies and intentional acts. Understanding your policy exclusions is critical to avoiding gaps in coverage.
Named Peril Policy
An insurance policy that only covers losses caused by perils specifically listed in the policy, such as fire, theft, or windstorm. If a loss is caused by a peril not on the list, it is not covered. Named peril policies are generally less expensive than open peril policies.
Open Peril Policy
An insurance policy that covers all causes of loss except those specifically excluded. Also called an all-risk policy, it provides broader protection than a named peril policy because you are covered unless the policy explicitly says otherwise.