Understanding insurance perils

by Sue Revis 11/28/2022

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Insurance perils are specific events covered in your policy. It's important to understand the limits of your homeowners insurance policy, especially any excluded perils. Here's a quick guide to the basics:

Perils commonly covered by insurance

A named perils plan covers 16 types of peril. However, it's not a universal list. For example, wind damage is not included in certain coastal zones and must be separately endorsed.

How peril, hazards & risk differ

The words risk and danger are similar to each other and are sometimes used interchangeably. However, insurance counts them as separate things. A risk is the possibility of a loss, while a peril or hazard is the actual cause of a loss.

Types of home insurance risks

Some common examples of insurance risks include:

  • Swimming pools.
  • Fireplaces.
  • Outdoor fire pits or ovens.
  • Pets.

The HO-2, HO-3 and HO-5 types of homeowners policies determine if your policies are defined against a set of specific risks based on location or home features.

Who is most affected by a home insurance peril?

A homeowner is affected by the perils insured in their policy, but so is the insurance company. Increased risk and covered perils both pose a higher cost to your insurer, which can increase the cost of your coverage.

Your mortgage lender could also be indirectly affected by home insurance risk because damage could negatively affect your home's value. To determine the specifics of your homeowners insurance, consult your provider for details.

About the Author
Author

Sue Revis

Successfully involved in residential real estate sales since 1981 • A highly successful and skilled Certified Residential Broker and Realtor® • Full time broker • Initial training with the most successful regional Real Estate Company in New Jersey o Extensive grounding with this large, professional organization • Specialize in upscale communities in Massachusetts and previously New Jersey; always with the most successful local agencies; now out of the William Raveis office