What is referred to as an excluded peril?

An excluded peril refers to a specific risk or event that is not covered by an insurance policy. This means that when a peril is excluded, the insurer will not provide coverage or compensation for losses that arise from that particular event. Understanding excluded perils is crucial for policyholders, as it helps them recognize gaps in coverage and the circumstances under which they may not receive benefits from their insurance.

For instance, a standard homeowner's insurance policy may exclude damage caused by floods or earthquakes. If a policyholder experiences such a loss, they would not receive compensation because those events are classified as excluded perils. Being aware of which perils are excluded allows individuals to make informed decisions about additional coverage or policies that might better protect them against certain risks.