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Coverage Against Perils: What is a Peril & What’s Often Covered?

Learn about the list of 16 commonly named perils and how carriers can use rate by peril. | WaterStreet Company

Policyholders can gain peace of mind by seeing exactly which perils are covered by their P&C insurance.

It’s up to the insurer to outline these perils in clear details so that the insured can easily understand their coverage. Homeowners may worry about hurricanes, fires, or losing electricity, and these fears are among the main motivations for gaining coverage.

WaterStreet Company offers P&C insurance technology to help carriers and MGAs efficiently handle policies, claims, billing and more all in one unified system.

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What is a Peril?

A peril is an unexpected event causing property damage or loss, whether through a natural or man made event. Protection against perils are often offered in two ways:

Named Perils Coverage – the insurer provides a list of the exact perils offered through the policy.

All Perils or Open Perils Coverage – the insurer allows coverage on all perils that are not individually excluded.

Perils to Highlight in P&C Offerings

Named perils coverage indicates a list of perils that are included within a policy. There are a total of 16 commonly named perils for homeowners insurance:

  • Fire or lightning
  • Windstorm or hail
  • Explosion
  • Riots
  • Aircraft
  • Vehicles
  • Smoke
  • Vandalism
  • Theft
  • Falling objects
  • Weight of ice, snow, or sleet
  • Accidental discharge or overflow of water or steam
  • Sudden and accidental tearing, cracking, burning, or bulging
  • Freezing
  • Sudden and accidental damage due to short circuiting
  • Volcanic Eruption

Named perils coverage is very specific to perils listed in the policy details. This allows carriers to offer less expensive coverage options by excluding all events not listed. This list also gives policyholders an easy reference on what to expect from their coverage and allows them to seek out further coverage as needed. When placing a claim, carriers can hold the policyholder to proving their claim is based on a named peril.

Transitioning to Rate by Peril

Many insurers are shifting towards a rate by peril system in order to offer more granular and relevant policies.

One study found 65% of carriers that had not yet offered rating by peril would begin by 2017. ISO has determined 20 building characters that influence rating by peril, such as having a pool in the yard or the roof being a certain age.

WaterStreet Company connects to third-party integrations that help inform the rate by peril process, offering policy administrators and underwriters more information to weigh the risk of insuring property against peril damage. Rating by peril can help save the insured save as well.

Here are the key benefits to rating by peril:

  • Individualized quoting tailored to the policyholder’s risk
  • Better understanding of risk by regions, such as locations more at risk to select perils
  • Better insight into crafting policies by peril for marketing protection against perils to at-risk regions
  • Costs saved for the insured by offering the choice to cover against most common perils per their policy
  • Improved pricing structure for insurers to implement for the costliest vs least costly policies

WaterStreet Company & Carriers with Insured Perils

WaterStreet Company offers insurers a unified system for managing the full policy lifecycle. With document management at its core, gain complete control over a history of records with policyholders and automatically generate documents as new policyholders are gained.

Take advantage of third-party integrations to better gain data for assessing risk. Our advanced API allows carriers to connect to any number of third-party integrations.

Reach out to WaterStreet Company today to request a consultation and demo of our solutions.

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