The word peril is part of the insurance world.
But what does it really mean to a homeowner? The definition of peril is any unexpected or accidental event, situation, or incident that causes property damage or loss.
There are multiple levels of coverage that will affect which perils a home insurance policy will cover.
The Insurance Bureau of Canada (IBC) summarizes them as:
- Comprehensive. This covers the building and contents for all risks arising from accidents or unforeseeable incidents, except for those that are specifically excluded. It is the most popular type of policy, but its premiums are higher.
- Basic or Named Perils. This policy covers those perils that are specifically stated. This offers basic and affordable coverage, but homeowners that choose this should have a higher risk tolerance. Premiums are lower, but the insurance offers the narrowest coverage.
- Broad. Provides comprehensive coverage on big-ticket items, such as the building and attached structures, as well as named perils coverage on contents.
- No Frills. Offered by some insurers, this policy covers properties that don’t meet normal insurance standards. It is often sold without any coverage for contents. A home that is left vacant or has unusually high repair issues like old plumbing and electrical needs would be a good candidate for this policy.
Understanding perils
A peril is a chance event that is unexpected and accidental as far as the policyholder is concerned. For example, the IBC notes, if a garage door is spray painted with graffiti and must be removed and cleaned, the damage is due to the peril of vandalism.
However, the gradual deterioration of shingle roofing or the rotting of wooden fencing is nature and expected and, therefore, not an insured peril. It would be considered normal wear and tear. Remember too, as a homeowner you are required by the insurer to maintain your property.
Home insurance policies, as mentioned above, offer coverage for either named perils – such as fire, wind, theft, etc., except those excluded or a combination of both.
Uninsured perils
A home insurance policy is not a maintenance contract. Predictable events such as flooding of a home built on a flood plain, or preventable events, such as frozen indoor pipes or damage from pests/insects are not covered.
Other examples include: landslides or earth movements, losses caused by criminal acts by the policyholder, war or terrorism.
Know your policy
An insurance policy is a legal document and it’s your responsibility to understand what is – and what is not – included in it. If you are unsure, speak with your insurance broker to know before something happens.
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