An uninsurable peril is an event or situation your insurance policy won’t cover if it results in damages or losses to your personal property.
Uninsurable perils, explained
A ‘peril’ refers to an incident that could result in damage to your house, apartment, or personal belongings (like a laptop or stereo system). Perils include things like windstorms, vandalism, and theft.
Surprise, surprise: An ‘uninsurable peril’ is a danger that can’t be insured by your specific renters or homeowners policy.
Here are a few examples of some typical uninsurable perils:
- Ongoing leaks
- Insects and rodent infestations
- Melting or moving snow and ice
What’s the logic behind uninsurable perils?
Put simply, these uninsurable perils would pose too big of a risk for your insurance company (or would make your insurance policy incredibly expensive). These types of perils also tend to be catastrophic in nature.
While these types of perils aren’t covered under your standard policy, it’s possible to get coverage for some of them elsewhere. For example, you can purchase separate earthquake insurance or flood insurance. You can also add on coverage for certain uninsured perils through something called an endorsement.
That said, there are a few uninsurable perils that you likely won’t be able to get coverage for anywhere. These include perils and risks related to things like trade secrets, pandemics, or reputational damage. These are mostly intangible risks, meaning it’s not possible for an insurer to price them properly and provide coverage.
Uninsurable perils vs. named perils (and open perils)
In your renters and homeowners insurance policy, there are three categories to keep in mind.
- Uninsurable perils – general things your policy won’t ever cover
- Named perils – specific things your policy will cover
- Open perils – with this type of coverage, your policy will cover anything that isn’t specifically excluded
Your insurance policy will apply either named or open perils to various coverages. For instance, the physical structure of your house and its accompanying structures may be covered for open perils, whereas damage to your belongings (laptop, musical instruments, bike) would only be covered for specific, named perils like fire, theft, windstorm damage, and so on.