What does a peril mean? | S2 Episode 4 | No Dumb Questions

Your home insurance typically only covers perils, but what even is a peril? Stay prepared with Julia and Sara as they discuss:

• What perils are
• What perils are and aren’t covered
• The differences between and open and named peril policy
• How to be prepared when a peril strikes

Knowing what perils are covered can save you a lot in the long run! Enjoy!

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Disclaimer: This podcast is produced by Insurify and is intended for educational purposes only. We are not licensed insurance agents, and we do not constitute personalized financial or legal advice. Personal situations vary, and you should always consult a licensed professional before making financial decisions.

Transcript

SPEAKER_02 0:10

Welcome back to No Dump Questions, Insure Five's podcast about straight talk uncovered claims and savings. And I'm Sarah, and this is Glasses Edition, Sarah.

SPEAKER_00 0:18

Oh my goodness, I'm Nigelia. This is also Glasses Edition, Julia, but always glasses edition. And today's topic is perils, a word that you've definitely seen in your policy, but maybe you didn't fully understand what it meant.

SPEAKER_02 0:32

Yeah, so what are perils? What are the covered perils? And most importantly, what's not a covered peril?

SPEAKER_00 0:38

Yes. We need to know this. Perils can really make or break a claim. So here's what y'all need to know. Yeah. Okay, so the quick answer for what is apparel? Yes. Apparel is something that can damage your home and cause you to file a claim.

SPEAKER_02 1:03

Yeah, exactly. A covered peril is something that your insurance will actually pay for. So commonly covered perils are like theft, fire, vandalism, wind, and falling objects.

SPEAKER_00 1:12

Yes, exactly. Um, and if it's not the covered peril, that means that you are paying out of pocket for the damage that that peril caused. Um, often that is things like flooding, earthquakes, um normal wear and tear, or damage due to neglect.

SPEAKER_02 1:28

Yeah, and there's two types of peril policies. There's a named peril policy, which has those perils literally named in the policy. Like exactly. And then an open peril policy, which kind of is a little bit more ambiguous and can cover a little bit more. Yes. So we're gonna deep dive into what these mean and how that coverage actually works. Yep. Let's do it. Okay, so apparel is an unexpected cause of damage or loss. Exactly.

SPEAKER_00 1:53

And to get like officially official in insurance, apparel is, like you said, an unexpected and unanticipated event that damages your home or your property. Exactly.

SPEAKER_02 2:05

So, what is a covered apparel in insurance that includes fires, storms, theft, vandalism, hail, snow, and like the weight of snow, smoke, falling objects, and then water damage from maybe your plumbing or your AC or heating. Yes. Um, but with very specific conditions on that one.

SPEAKER_00 2:23

Yes, exactly. And a simple way to think about it is kind of that like apparel is what went wrong? Yeah. What went wrong here? Um, and a covered peril is an event that your policy protects against. Yeah. So a quick example a windstorm causes a tree to fall and damage your roof. That, you know, if you have coverage for that peril, would be covered under your policy.

SPEAKER_02 2:47

Exactly. And not all perils are covered. So two really common ones are flooding and earthquakes. Those are never covered by a standard home insurance policy.

unknown 2:54

Yes.

SPEAKER_00 2:54

So this is where that gets important, right? So a named peril policy, like you've already said, only covers perils that are specifically listed and named on your policy. So you will see them written on your policy. Exactly. And it's named in your policy. If it's not listed, it's not covered. Exactly. Yeah. And an open peril policy, kind of like the name suggests, though it's a little bit more of a vague name, I feel like, um, covers everything except what's excluded. So basically, in a policy like that, you can assume that it your policy covers a peril unless you see there is an exclusion in your policy. So it's kind of like the exclusions are named versus the perils. Do you know what I mean? Yeah. Um, there is often a price difference with that kind of policy, usually because it's more comprehensive, it's more broad coverage, it can be a little bit more expensive. Um, so you definitely want to confirm whenever you've got a policy, which which type it is so that you know what you've got.

SPEAKER_02 3:53

Yeah. So a named peril is a limited list, and then an open peril policy is more a broad protection. Yes, exactly. All right, so let's get into some examples of how perils would work. So um a fire breaks out in your kitchen, say you're cooking and something catches on fire and it breaks out in your kitchen, that would be a covered peril.

SPEAKER_00 4:11

Yes. Like I mentioned, tree falls on the garage that's ta attached to your house during a storm, that could be a covered peril.

SPEAKER_02 4:18

Yeah. But if a flood damages your basement, that is not covered and you need a separate flood insurance policy. Yes, exactly.

SPEAKER_00 4:25

Okay, so actually an important distinction here. So we're talking a lot about perils. Another word that you might see is hazard. Yes. So let's talk about the difference. So apparel is the event. So like the fire or the storm.

SPEAKER_02 4:38

Yes. Yeah. And a hazard is something that increases the risk. So some examples would be like broken wiring or a slippery walkway or like an older roof that's more likely to break. So it's not always covered if the hazard isn't taken care of. A good example is if you live in an old home and it has old wiring that's not up to code and it catches on fire, that may not be covered.

SPEAKER_00 5:00

Exactly. That's a great example.

SPEAKER_02 5:01

So this is really important because if you don't understand your perils, you might assume that you have coverage for something that you might actually not.

SPEAKER_00 5:08

Yes. And we don't, we don't want to be left, right, holding the bag. No, especially when that happens. Especially because home insurance is so expensive. Yeah, exactly. Yeah. And what you can count on, right? And so some of the biggest gaps, like we've said, are flood damage and earthquake damage. They call those very common exclusions, right? Common exclusions from the policy.

SPEAKER_02 5:26

Exactly. So when you're asking your insurance agent or your insurance company, what does your home insurance cover, you want to make sure you know all those perils that are either listed or the exclusions if you have that open peril policy.

SPEAKER_00 5:38

Exactly. Because then if you need it, you can get coverage for that as well in a separate policy.

SPEAKER_02 5:42

Yeah. Okay. So now that we have a better understanding of what perils are and what they cover, let's go into some frequently asked questions.

SPEAKER_00 5:48

Amazing. I'm ready.

SPEAKER_02 5:50

Julia, what does all perils deductible mean?

SPEAKER_00 5:53

So an all perils deductible means that basically it's a standard deductible for non-weather perils. So things like wind and hail could have a specified deductible, but something like a more standard coverage for fire would have that standard deductible.

SPEAKER_02 6:10

Sure. Which part of a property insurance policy describes the perils?

SPEAKER_00 6:15

Ooh, great question. Cause this is where you look in the policy. Yes. So the insuring agreement or the perils insured against section is where the where you will see that described.

SPEAKER_02 6:25

Yes. What are named perils on an HO3 policy?

SPEAKER_00 6:30

Ooh, HO3. Very fancy. Very fancy. So an HO3 is just kind of a shortened term for a standard home insurance policy. This is what most people will have to cover their home. So the named perils in an HO3 depend on your policy, right? And the type of coverage that you have. But like you've said, usually they include fire, windstorms, accidental water damage, theft, and a few other things. Exactly. What is a special peril policy? Special. A special peril policy is another name for an open perils policy. And like that, it covers just about everything except for exclusions. But again, check with your insurer better safe than sorry. You want to know. Yeah.

SPEAKER_02 7:12

All right, let's get into our action plan. Amazing. All right. So, like we've said many a time at this point, perils are very important. It's important to understand what perils are covered in your policies so you know what your insurance policy is going to pay for. So, first, check your policy. Look and see if it's a named peril policy or an open peril policy.

SPEAKER_00 7:32

Yes. And then step two, review the list of covered perils or exclusions if it's an open peril policy. And just to make sure that you are prepared in case something happens. Exactly.

SPEAKER_02 7:44

And then you're gonna want to identify any gaps that you may see. So obviously, flooding, flood insurance if you're in a flood-prone area, earthquake insurance if you're in an earthquake prone area. Um, if there's anything that might make your coverage void, like those hazards we talked about earlier. Right.

SPEAKER_00 7:59

Yes, so important. Um, and then step four, um, compare policies. You know, this is a super easy way to save money and also just you know, compare different kinds of coverage if you're curious about what you could be paying for something else, right? Um, so look at quotes for named and open perils policies to see if maybe you could get a better deal on more like broader coverage. Exactly. You know?

SPEAKER_02 8:21

Yeah, you don't know until you look.

SPEAKER_00 8:22

Exactly.

SPEAKER_02 8:23

All right, so overall, perils are what can go wrong.

SPEAKER_00 8:26

Yes. And a covered peril is what insurance actually pays for.

SPEAKER_02 8:30

Yes. And a named versus open peril policy is how much protection you actually have. Yes, and don't assume you're covered, always check.

SPEAKER_00 8:37

Always check. Check.

SPEAKER_02 8:38

Because I thought I was covered is a very expensive sentence.

SPEAKER_00 8:41

Oh no, yes, we don't want that. Um, thank you so much for tuning in. Definitely compare quotes with the link below. And until next time, stay prepared and protect your wallet.

SPEAKER_01 8:52

You're listening to No Dumb Questions, an Insurify podcast. This content does not constitute personalized financial or legal advice. This podcast is written, produced, recorded, and developed by Sarah Getman, Julia Taliessin, Riley Hines, Sidney Harrell, and edited by Angelica Coleman. Compare insurance quotes by clicking the link below.