In insurance, a “peril” refers to the cause of loss or damage to property, such as a fire, theft, or natural disaster like a windstorm.
Understanding ‘Perils’ in Insurance
Not every peril is covered under standard Salt Lake insurance policies, so homeowners must understand which risks are included and which require additional coverage.
For example, while fires or theft are often included in basic policies, risks like earthquakes or floods require separate, specialized coverage.
Keep reading to learn more about peril policies in insurance!
Named Peril Policies
Named peril policies offer a more targeted approach by covering only the specific perils listed in the policy.
For instance, a named peril policy may include protection against fire, theft, or vandalism. However, if a peril isn’t listed—such as a flood or earthquake—it will not be covered under this type of policy.
Named peril policies often appeal to homeowners looking to protect against specific, foreseeable risks without paying for broader coverage.
In the event of a loss, the policyholder must prove that the damage resulted from one of the listed perils to receive compensation.
Open Peril Policies
An open peril policy, also known as an ‘all-risk’ policy, covers most or all perils except perils specifically excluded, such as high-risk or unusual events. Two examples of open peril policies commonly excluded are certain types of water damage or acts of war.
Open peril policies tend to be more broadly defined than named peril policies since they cover more types of perils.
For this reason, open peril policies are preferred by homeowners who want to minimize the number of exclusions and feel more at ease knowing that they are covered for nearly any event.
As a general rule, with an open peril policy, once a claim is submitted, the insurance company has the burden of proof to show that the loss resulted from a peril excluded from the policy.
This makes the claims process less burdensome for the policyholder.
Choosing the Right Utah Insurance Policy
Choosing a named peril or an open peril policy depends on understanding the specific risks at your property.
A detailed property inventory taken with an eye to risks in the vicinity – say, regional flood risks or the frequency of high winds – can help you figure out which kind of coverage is most appropriate for you.
An experienced insurance broker can help, too. Brokers know the vagaries of different policies and can help homeowners find the right balance between adequate coverage and good value.
Call the team at ASA Insurance today for the high-quality customer service expertise you’re looking for!
