Lender Placed Insurance - What is a peril?

The term “peril” within a Lender Placed Insurance Policy refers to the hazards and/or events that cause damage or loss to a property. An example of a peril could be fire, hail, vandalism, wind and much more. The reason why these are considered examples of perils is because they could potentially cause damage, or loss to a property. Perils are also referred to as “risks” within a Lender Placed Insurance Policy.

Depending on the insurance carrier, a Lender Placed Insurance Policy may have two different coverage options when it comes to perils. The first being an “Insured Peril” insurance policy, and the second being an “All Risk” insurance policy. 

The term “insured peril”, also known as “named peril,” refers to the perils listed within a Lender Placed Insurance policy that would be covered in the event of a claim. For example, if the insurance policy listed fire as an “insured peril”, a lender would have coverage in the event a fire damaged the property. However, in the event of a claim, under a “insured peril” policy, most insurance providers will want proof or evidence that a “insured peril” caused damage to the property. In this case, the insurance provider would send out a claim adjuster to investigate the damage and determine the source. 

An All Risk, Open Peril or All Peril Lender Placed Insurance policy provides coverage for all perils except the perils specifically excluded within the insurance policy. For example, in the event of a claim, if the Lender Placed Insurance Policy does not does not specifically exclude fire as a peril, the policy will cover damage caused by fire to the property. 

It is always important to understand your Lender Placed Insurance policy, and the coverage it provides. Insurance policies contain conditions, so it is best to understand not only the coverage, but the conditions as well.

First Service Corporation offers Lender Placed Insurance services customized to fit the needs of the financial institution. If your financial institution has questions about your current Lender Placed Insurance policy, or would like to receive a free quote, please feel free to give First Service a call today! Click the button below to learn more about our Lender Placed Insurance program.