Last Updated March 2026

The definition of peril, in insurance, is the cause of a loss — the event that leads to damage or financial harm. Examples include a fire or windstorm damaging a home, a pet injuring a guest or a thief stealing belongings.

Outside of insurance, peril often means danger or exposure to harm. The word comes from Middle English and Old French, where it was used to describe serious risk. In insurance, the meaning is more precise. Perils are used to identify how a loss happened, which plays a central role in determining whether and how an insurance policy may help pay for the damage.

Types of perils

Insurance policies typically group perils into broad classifications.

Natural perils are caused by weather and other natural forces. Common examples of natural perils include:

• Windstorms 
• Hail 
• Lightning 
• Wildfires 
• Earthquakes 
• Floods 

Some natural perils are typically covered by standard homeowners insurance, while others are not. Natural disaster coverage depends on what, exactly, happens. Earthquakes and flooding are examples of perils that are not included and require an endorsement or a separate insurance policy. But the high winds of a tornado or hurricane may be covered.

Human-made perils are human actions that result in losses. Examples include:

• Theft 
• Vandalism 
• Fire caused by human activity 
• Explosions 

Many human-made perils are covered in homeowners or renters insurance policies, but many are not. For example, libel and slander are human-made perils that are not typically covered by a homeowners policy but can be covered with umbrella insurance. Intentional and criminal acts of harm by the homeowner, such as arson or damage resulting from an illegal gambling operation, are examples of human-made perils that are typically excluded.

Perils are used to define coverage across the insurance industry, but they’re adjusted to reflect causes of loss specific to each kind of insurance. For instance, homeowners policies typically cover perils that are common causes of damage or loss to homes, like fire, wind and theft. Auto insurance will include automotive perils such as collision, along with vandalism and theft. Marine insurance may include shipwrecks and collisions at sea. Business insurance may cover perils such as equipment breakdown and property damage.

How perils work in insurance

Perils in an insurance policy define which losses are covered. Policies are set up in various ways to provide broader or more narrow coverage. These are common categories:

Named-peril policies list specific perils that are covered. For example, this type of homeowners policy typically names 16 covered perils, including fire, windstorms, lightning and theft. The list can vary by insurer and policy type.

Open-peril policies are broader and cover losses unless a peril is specifically excluded. Common exclusions from open-perils homeowners coverage are earthquakes and flooding.

Insurers often use both categories in one policy. For example, a homeowners policy may use open-peril coverage for the dwelling but named-peril coverage for personal property.

How perils differ from risks and hazards

• A peril is the event that causes a loss. It answers the question, “What happened?” 
  Examples include fire, theft, a windstorm or a collision. 
• Risk refers to the likelihood that a peril will occur and cause a loss. It answers the question, “How likely is this to happen?” For example, a home on the Gulf Coast might carry a higher risk of hurricanes. 
• Hazard refers to a condition that increases the chance or severity of a loss. It answers the question, “What makes the loss more likely or worse?” Examples could be old wiring or unsafe driving habits.  

Understanding the definition of a peril and which perils a particular insurance policy covers can help you select the coverage that best fits your needs, the risks you face and your budget — while helping you protect yourself against loss.

The information contained in this page is provided for general informational purposes only. The information is provided by Farmers^® and while we endeavor to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to this article or the information, products, services or related graphics, if any, contained in this article for any purpose. The information is not meant as professional or expert advice, and any reliance you place on such information is therefore strictly at your own risk.

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