Definition
Perils
Perils refer to specific risks or causes of loss that can result in damage or destruction to property. These risks are typically categorized under homeowner’s insurance policies, which provide coverage for many types of perils caused by accidents, natural events, or human actions. However, standard policies typically exclude certain types of perils, such as flooding from rising water, which require additional or specialized insurance coverage.
Examples
Some common examples of perils include:
- Fire: Damage resulting from accidental or intentional ignition.
- Windstorms: Destructive winds caused by various weather conditions.
- Hail: Precipitation in the form of ice pellets, causing surface damage.
- Tornadoes: Violently rotating columns of air, wreaking widespread havoc.
- Hurricanes: Intense tropical cyclones with high winds and rain.
Frequently Asked Questions (FAQs)
What is not typically covered under standard homeowner’s insurance for perils?
Standard homeowner’s insurance policies do not typically cover flooding from rising water. This type of coverage requires a separate flood insurance policy.
Are natural disasters classified as perils?
Yes, many natural disasters such as earthquakes, tornadoes, and hurricanes are classified as perils and may be covered by homeowner’s insurance, subject to policy specifics.
How can homeowners increase their coverage for excluded perils?
Homeowners can purchase additional insurance policies such as flood or earthquake insurance to cover perils not included in typical homeowner’s insurance.
What is meant by “named perils”?
“Named perils” refer to risks specifically listed in an insurance policy. Coverage is provided only for losses caused by the perils explicitly named.
Do perils affect the premium of an insurance policy?
Yes, the type and number of covered perils can affect the premium of an insurance policy. More extensive coverage generally results in higher premiums.
Homeowner’s Insurance Policy
A type of property insurance that covers losses and damages to an individual’s house and assets in the home.
Risk Management
The identification, assessment, and prioritization of risks followed by coordinated application of resources to minimize, monitor, and control the impact of unfortunate events.
Flood Insurance
Specialized insurance coverage against property loss from flooding, which is not typically included in standard homeowner’s policies.
Natural Disasters
Severe and extreme weather events causing significant damage to property and life. Examples include hurricanes, earthquakes, and floods.
Online References
Suggested Books for Further Studies
- “Insurance and Risk Management” by P.K. Gupta
- “Fundamentals of Risk and Insurance” by Emmett J. Vaughan & Therese Vaughan
- “Property Insurance Litigator’s Handbook” by Leonard E. Murphy
Fundamentals of Perils: Insurance Basics Quiz
### Which of the following is typically excluded from standard homeowner’s insurance coverage?
- [x] Flood from rising water
- [ ] Fire
- [ ] Windstorm
- [ ] Hail
> **Explanation:** Standard homeowner’s insurance policies typically exclude coverage for flooding from rising water, which requires separate flood insurance.
### What term describes specific risks or causes of loss listed in an insurance policy?
- [ ] Comprehensive perils
- [x] Named perils
- [ ] General risks
- [ ] Full-coverage risks
> **Explanation:** "Named perils" refer to specific causes of loss that are explicitly listed in an insurance policy, and coverage is provided only for those specific perils.
### What type of specialized insurance is needed to protect against flooding?
- [ ] Windstorm insurance
- [x] Flood insurance
- [ ] General disaster insurance
- [ ] Fire insurance
> **Explanation:** Homeowners need to purchase flood insurance to cover losses resulting specifically from flooding.
### Which natural disaster is often classified as a peril in homeowner’s insurance policies?
- [x] Tornadoes
- [ ] Land subsidence
- [ ] Fungus infestation
- [ ] Termite damage
> **Explanation:** Tornadoes are often classified as a peril in homeowner’s insurance policies, while other conditions like land subsidence or termite damage may not necessarily be included.
### Would damage from hail be typically covered under a standard homeowner's insurance policy?
- [x] Yes
- [ ] No
- [ ] Only in certain areas
- [ ] Not by default
> **Explanation:** Damage from hail is generally covered under a standard homeowner's insurance policy, qualifying as a common peril.
### Homeowner’s insurance covering multiple identified risks is referred to as what?
- [ ] Bundled coverage
- [ ] Unnamed risks insurance
- [x] Multi-peril insurance
- [ ] Exclusive perils policy
> **Explanation:** Insurance that covers multiple identified risks is referred to as "multi-peril insurance," providing broader protection.
### What is required to cover property damages caused by earthquake tremors?
- [ ] Standard homeowner’s policy upgrade
- [ ] Special addendum to the policy
- [x] Earthquake insurance
- [ ] No additional coverage is needed
> **Explanation:** Earthquake insurance is needed to cover property damages caused by earthquake tremors, as these are typically excluded from standard homeowner’s policies.
### Why might windstorm be included as a peril in a homeowner's insurance policy?
- [ ] It's simple to predict.
- [ ] It causes minimal damage.
- [x] It represents a common and frequent risk.
- [ ] It's inexpensive to insure.
> **Explanation:** Windstorm is included as a peril due to its common occurrence and potential to cause substantial damage.
### How can one increase their homeowner's insurance coverage for additional perils?
- [ ] By relocating to a safer area
- [ ] By purchasing more expensive furniture
- [x] By securing additional policies for excluded perils
- [ ] By increasing policy deductibles
> **Explanation:** Homeowners can increase coverage for additional perils by securing specialty insurance policies, such as those for flood or earthquake damage.
### Is flooding from a broken water pipe usually covered under a standard homeowner's insurance policy?
- [x] Yes
- [ ] No
- [ ] Only when endorsed
- [ ] Not without extra premiums
> **Explanation:** Flooding caused by a broken water pipe is typically covered under standard homeowner's insurance policies, unlike flooding from rising water, which requires special coverage.
Thank you for exploring the risks of perils and the basics of insurance coverage through our detailed guide and engaging quiz questions. Keep enhancing your knowledge in the realm of insurance and risk management!
