Specified perils coverage might sound like a complex insurance term, but its purpose is simple: protecting your assets from specific risks. Imagine driving down a scenic road, the sun shining bright, and suddenly a deer leaps across your path. The collision leaves your car damaged. Would your insurance cover this? If you have specified perils coverage, it might – but only if animal collisions are listed among the covered risks.
This insurance option offers protection against events explicitly mentioned in your policy. Unlike comprehensive coverage, which covers almost everything except exclusions, specified perils coverage narrows down the protection to named events. But is it the right choice for you? Let’s dive deep into the world of specified perils coverage, exploring how it works, its benefits, limitations, and whether it’s the right fit for your needs.
What is Specified Perils Coverage?
Specified perils coverage is a type of auto insurance policy that protects your vehicle from damage caused by specific events listed in your policy. These events, known as “perils,” are predefined and outlined in detail, meaning your insurer only covers damage if the cause is explicitly mentioned.
This coverage is more focused than comprehensive insurance, which covers a broader range of incidents. For example, while comprehensive coverage includes theft, vandalism, fire, and natural disasters, specified perils coverage might only include some of these, depending on what is listed in your policy.
Common Perils Covered Under Specified Perils Coverage
The specific perils included in this type of coverage may vary by insurer, but generally, the following are commonly covered:
- Fire or Explosion: Damage resulting from a fire or explosion.
- Theft: If your vehicle is stolen or attempted theft occurs.
- Vandalism: Damages from malicious acts, such as graffiti or broken windows.
- Hail or Lightning: Natural events that cause physical damage.
- Falling Objects: Damage from objects like tree branches or debris.
- Windstorm or Tornado: Damages caused by strong winds or tornadoes.
- Earthquake: Ground movement causing damage to your vehicle.
- Flood: Water damage due to floods or flash floods.
- Animal Collision: Damage caused by hitting an animal on the road.
Not all specified perils policies cover all these risks, so it’s crucial to check your policy details to understand which events are included.
How Does Specified Perils Coverage Work?
Specified perils coverage operates on a “named perils” basis, which means only events listed in your policy are covered. If your vehicle is damaged by an incident not explicitly mentioned, the insurance company won’t pay for the repairs.
Example Scenario
Imagine a powerful windstorm passes through your neighborhood, knocking down a tree that falls on your parked car. If “falling objects” and “windstorm” are listed as covered perils in your policy, your insurance would cover the damage. However, if “windstorm” isn’t included, you would have to pay for the repairs out of pocket.
This specificity is both the strength and limitation of specified perils coverage. It allows for lower premiums because the insurance company’s risk is limited, but it also means less protection compared to comprehensive coverage.
Why Choose Specified Perils Coverage?
Choosing specified perils coverage depends on several factors, including your location, driving habits, and budget. Here are some scenarios where this coverage might be the right choice:
Lower Premiums for Budget-Conscious Drivers
Specified perils coverage is generally cheaper than comprehensive coverage because it limits the insurer’s liability to named events. If you’re on a tight budget but still want protection against common risks like theft or fire, this could be a suitable option.
Seasonal Vehicle Owners
If you own a seasonal vehicle, such as a convertible or motorcycle, that is stored for part of the year, specified perils coverage provides protection against theft, fire, or damage while it’s parked. Since the vehicle isn’t in use, you won’t need collision coverage, making this a cost-effective solution.
Living in Low-Risk Areas
If you live in an area with a low risk of certain events, such as earthquakes or floods, you can exclude these perils to reduce your premium. Specified perils coverage allows you to tailor the policy to your specific needs.
Older Vehicles with Lower Value
For older vehicles that have depreciated in value, paying for comprehensive coverage might not be cost-effective. Specified perils coverage provides basic protection at a lower cost, suitable for vehicles where full coverage isn’t necessary.
Specified Perils Coverage vs. Comprehensive Coverage
It’s essential to understand the difference between specified perils coverage and comprehensive coverage to make an informed decision.
| Feature | Specified Perils Coverage | Comprehensive Coverage |
| Scope of Coverage | Limited to named events | Covers all events except exclusions |
| Cost | Generally cheaper due to limited risks | More expensive due to broader protection |
| Flexibility | Allows customization of covered perils | Fixed list of covered events |
| Common Exclusions | Events not explicitly listed in the policy | Intentional damage, wear and tear, mechanical failure |
| Risk Level | Higher risk due to limited coverage | Lower risk due to extensive protection |
While comprehensive coverage offers peace of mind by covering almost all unforeseen events, specified perils coverage is more affordable but less inclusive. It requires careful consideration of which risks you need protection from.
Limitations of Specified Perils Coverage
While specified perils coverage is cost-effective and customizable, it comes with limitations:
Not All Incidents Are Covered
Since coverage is limited to named events, anything not explicitly listed won’t be covered. This includes incidents like:
- Mechanical breakdowns
- General wear and tear
- Damage from hitting a pothole
- Damage caused by neglect or improper maintenance
Higher Out-of-Pocket Costs
In the event of damage from an uncovered peril, you’ll have to pay for repairs yourself. This could lead to significant out-of-pocket expenses.
Limited Protection for High-Risk Areas
If you live in an area prone to natural disasters not covered under your specified perils policy, you may be at risk. For example, if your policy doesn’t cover flooding and you live in a flood-prone area, your vehicle won’t be protected.
Is Specified Perils Coverage Right for You?
Choosing specified perils coverage depends on your individual needs, lifestyle, and budget. Consider the following factors:
Evaluate Your Risk Exposure
Consider the likelihood of events in your area. If hailstorms are common but earthquakes are rare, you might include coverage for hail but exclude earthquake coverage.
Assess Your Vehicle’s Value
For older vehicles with depreciated values, specified perils coverage can be more cost-effective than comprehensive insurance.
Compare Costs with Comprehensive Coverage
Get quotes for both specified perils and comprehensive coverage. Sometimes the cost difference is minimal, making comprehensive coverage a better value.
Analyze Your Financial Situation
Consider your ability to pay out-of-pocket for damages from excluded events. If unexpected expenses would be burdensome, comprehensive coverage might be a safer choice.
FAQs about Specified Perils Coverage
- What is specified perils coverage?
Specified perils coverage is an insurance policy that protects against specific risks explicitly named in the policy. - How is it different from comprehensive coverage?
Comprehensive coverage protects against almost all risks except exclusions, while specified perils coverage only covers named events. - Is it cheaper than comprehensive coverage?
Yes, because it limits the insurer’s liability to specific events, leading to lower premiums. - What are common perils covered?
Common perils include fire, theft, vandalism, hail, flooding, animal collisions, and falling objects. - Can I customize my specified perils policy?
Yes, you can choose which perils to include, tailoring the coverage to your needs.
Conclusion
Specified perils coverage is a cost-effective option for drivers looking to protect their vehicles against specific risks. It offers flexibility and affordability but requires careful consideration of which perils are relevant to your circumstances. By evaluating your risk exposure, vehicle value, and financial situation, you can make an informed choice that balances protection and cost. Whether you own an older car, a seasonal vehicle, or live in a low-risk area, specified perils coverage provides tailored protection, ensuring peace of mind without breaking the bank.
How Ontario Insurance Can Help with Specified Perils Coverage?
Protecting your assets doesn’t have to be complicated. At Ontario Insurance, we specialize in tailored specified perils coverage to suit your unique needs. Our experienced advisors can help you understand which risks are relevant to you and design a policy that offers the right protection without unnecessary costs. Don’t wait until it’s too late – safeguard your vehicle today.
