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🔥 '''Covered peril''' is a specific cause of loss — such as fire, windstorm, theft, or vandalism — that an [[Definition:Insurance policy | insurance policy]] explicitly agrees to insure against. The set of covered perils in a policy determines the fundamental scope of [[Definition:Coverage | coverage]]: if a loss results from a peril that is listed (in a named-perils policy) or not excluded (in an [[Definition:All-risk policy | all-risk]] or open-perils policy), the [[Definition:Insurance carrier | insurer]] is obligated to pay, subject to the policy's other terms and [[Definition:Policy limit | limits]]. Identifying which perils are covered is one of the first steps in both [[Definition:Underwriting | underwriting]] a risk and [[Definition:Claims management | adjusting a claim]].

⚙️ Policies take one of two structural approaches to perils. A named-perils form lists every covered peril explicitly — the [[Definition:Policyholder | policyholder]] has protection only against the causes of loss itemized in the policy, such as fire, lightning, explosion, or hail. An open-perils (sometimes called "all-risk") form takes the opposite approach: it covers any cause of loss unless the policy specifically excludes it. The open-perils structure generally provides broader protection but comes at a higher [[Definition:Premium | premium]], and [[Definition:Exclusion | exclusions]] for events like war, nuclear hazard, or [[Definition:Wear and tear | wear and tear]] still apply. [[Definition:Underwriter | Underwriters]] choose between these structures based on the [[Definition:Risk appetite | risk appetite]] of the carrier and the nature of the insured's exposures.

💡 Clarity around which perils are covered has enormous practical consequences. After a catastrophic event, disputes frequently arise over whether the proximate cause of a loss was a covered peril — think of storm-surge damage where [[Definition:Flood insurance | flood]] is excluded but wind is covered. These causation questions drive litigation, shape [[Definition:Reserving | reserve]] estimates, and influence how [[Definition:Reinsurance | reinsurers]] assess their own exposures. For [[Definition:Insurance broker | brokers]] advising clients, a thorough understanding of covered perils — and the gaps that exist between named-perils and open-perils forms — is essential to ensuring that the client's most material risks are actually insured.

'''Related concepts'''
{{Div col|colwidth=20em}}
* [[Definition:Coverage]]
* [[Definition:Exclusion]]
* [[Definition:All-risk policy]]
* [[Definition:Named-perils policy]]
* [[Definition:Proximate cause]]
* [[Definition:Insuring agreement]]
{{Div col end}}

Definition:Covered peril - Revision history

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