What are “Special Perils”

Perils in a property insurance policy are causes of loss—fire, lightning, wind, or hail for instance. Policies that include coverage for “special perils” provide the broadest coverage— protection for any cause of loss not excluded by the policy.

Common exclusions are earthquake, flood, nuclear events, damage by insects or animals, and mold. If the cause of loss is not excluded by the policy, there is coverage for the damage.

So-called “named peril” policies provide a laundry list of events for which coverage applies—fire, lightning, hail, vehicles, aircraft, windstorm, explosion, and vandalism, for example. If the damage was caused by a peril not listed, there is no coverage.

Put another way, special perils policies cover any cause of loss except what is excluded. Named peril policies cover only causes of loss listed.
“Special perils” is the preferable way for a bank to insure its property.