Definition
In insurance terminology, a peril refers to the specific cause of loss or damage to property, or cause of personal injury. It is essentially the event that insurance policies aim to protect against by providing financial compensation to the policyholder.
Examples of Perils
- Fire: Damage to property due to fire.
- Flood: Property damage resulting from flooding, which may not be covered under standard policies.
- Theft: Loss or damage of property due to burglary or theft.
- Accidents: Personal injuries caused by accidents which are typically covered under health insurance or personal accident insurance.
Importance of Understanding Perils
Understanding what perils are covered by an insurance policy is crucial. This knowledge enables policyholders to effectively assess their risk exposure and choose adequate coverage to meet their insurance needs. Policy exclusions (specific perils not covered) also need to be clear to avoid surprises during claims.
External Resources
Citing a respectable source such as the National Association of Insurance Commissioners helps identify and understand various perils frequently recognized in the industry, as well as how they impact policy specifics.
kindly_note: External resources are referenced for further in-depth information and guidance only, not as legal advice.
