What does "excluded peril" mean in the context of property insurance?

In the context of property insurance, "excluded peril" refers to a risk that is specifically not covered by the insurance policy. Insurers define certain perils that are considered too risky or unmanageable, and these perils are explicitly excluded from coverage. This means that if a loss occurs due to one of these excluded perils, the insurance company will not provide any compensation or coverage for the resulting damages.

Understanding excluded perils is crucial for policyholders because it helps them know the limitations of their insurance and make informed decisions about additional coverage options or riders that may be necessary to protect against specific risks. This concept ensures that both insurers and insured have clarity on what is and is not protected under a given policy, which helps manage expectations regarding coverage.