Peril in the context of insurance refers to a specific risk or cause of loss that is covered by an insurance policy. It is an event or circumstance that can cause damage to property, injury to persons, or liability claims. Insurance policies typically outline what perils are covered, and these can include natural disasters such as fires, storms, and earthquakes, as well as human-caused events like theft, vandalism, or accidental damage. The coverage of perils in an insurance policy is critical as it determines under what circumstances a policyholder can file a claim. Some insurance policies offer protection against a wide range of perils, known as “open perils” or “all risks” coverage, while others may provide coverage for a specific list of named perils only. Understanding the perils covered by an insurance policy helps policyholders to assess their level of protection and the potential gaps in their coverage.
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