DEFINITION of ‘Uninsurable Peril’
Events or situations that insurance coverage is not available for, or which insurance companies are unlikely to provide policies for. An uninsurable peril is typically something that has a high risk of occurance, meaning that the probability of a payout by the insurance company is high and expected. Perils that are not covered are typically catastrophic in nature.
BREAKING DOWN ‘Uninsurable Peril’
An example of an uninsurable peril would be if an individual builds a home in an area known for flooding. Since the area has a history of the particular peril (i.e. a flood) occurring, it is unlikely that an insurance company will want to extend flood coverage because of the difficulty in managing the potential risk.