Peril Definition

The "Legal-Ease" Glossary

This is a fancy insurance term that refers to any exposure to risk. You can think of perils as “hazards” or "dangers." These hazards are almost always accompanied by a financial loss, which is why insurance was created. If your business experiences a covered loss, your insurance benefits alleviate you of the financial impact.

Typically, you’ll find perils listed in your Commercial Auto Insurance and Property Insurance policies to describe the kinds of exposures that that your insurance covers. For example, most Property Insurance policies cover the following perils:

  • Fire.
  • Windstorms.
  • Vandalism.
  • Theft.

Often, Property policies come in two forms: named perils or opens perils. Named perils means the policy only covers damage caused by the specific events listed in the policy. An open-peril policy covers damage caused by any event except for those explicitly excluded in the policy.

As far as perils go, the most common exclusions are…

  • Floods.
  • Earthquakes.
  • Hurricanes.

But that doesn’t mean small businesses that operate in disaster-prone regions should abandon all hope of getting adequate coverage. Rather, it means you should talk to an insurance agent about adding the appropriate riders to your Property policy to address these commonly excluded risks.

To learn more about protecting your business assets, check out our Property Insurance blog series.


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