What Are the Specified Perils? What Is Falling Objects?

Property insurance adjusters sometimes ask me whether a loss comes within the “specified perils” coverage of the policy. What does “specified perils” mean?  When one goes to the International Risk Management Institute (IRMI) website, under “insurance definitions,” the term “specified perils coverage” is defined as the following:

Specified perils coverage is an obsolete auto physical damage term.

However, in the third edition of Property Loss Adjusting published by The Institutes, this authoritative treatise states that the term “Specified-Perils Coverage” is synonymous with “named perils coverage.” It defines the term as being “a loss covered only if the policy identifies the cause of the loss (or peril).”

Today, I know that most adjusters use the term “specified perils” to mean those “named perils” specifically listed in the various forms of all risk insurance policies. Most personal property is still insured under a “named perils” basis, as discussed in Is Loss to Frozen Embryos Covered? A Case Study in Named Perils Coverage for Personal Property.    

Many property adjusters are referring to “specified perils” as those listed named perils specifically affording coverage in the Collapse Coverage of the policy, which references another section of named perils. A collapse caused by the perils listed in the named peril coverages for personal property is what they are usually referring to. These “specified perils” are typically:

Fire Or Lightning
Windstorm Or Hail
Explosion
Riot Or Civil Commotion
Aircraft
Vehicles
Smoke
Vandalism Or Malicious Mischief
Theft    
Falling Objects
Weight Of Ice, Snow Or Sleet
Accidental Discharge Or Overflow Of Water Or Steam
Sudden And Accidental Tearing Apart, Cracking, Burning Or Bulging
Freezing
Sudden And Accidental Damage From Artificially Generated Electrical Current
Volcanic Eruption

What is “falling objects?” Yesterday’s post, “Falling Objects Coverage – Are You Covered For That Tree Limb That Just Came Through Your Roof?” certainly indicates that falling trees and limbs fit the peril. However, the policy does not define the term. So, what is “falling objects” coverage?

Judges and most insurance company lawyers are going to look up case law. Remember my adage, “Why would anybody learn how to practice medicine by reading legal cases about medical malpractice? Why should we try to first learn about insurance and how it is supposed to work by reading insurance cases?” Property insurance adjusters need to invest in trade publications about insurance and treatises written by property insurance practitioners. The third edition of Property Loss Adjusting noted the following about Falling Objects Coverage:

Much of the damage caused by falling objects is covered under the vandalism, windstorm, aircraft, and lightning perils. Any other damage from falling objects is covered only under a special-form policy or a policy in which the falling objects is a specified peril. The falling object must make a hole in the structure’s exterior for coverage to apply. 

An article published by Adjuster’s International, 5 Odd Perils Most Standard Insurance Policies Cover, noted the following regarding “falling objects:”

Standard insurance policies are often “open perils” policies which “insures against loss to covered property from all causes except those that are specifically excluded¹.” This means that the only perils you will not be covered from are those listed as exclusions. As such, meteorites, trees, space debris, airplane debris and any other falling objects from the sky would typically be covered.

The Insurance Information Institute must receive questions from the public about things falling from the sky causing damage or injury. It discussed this scenario in the article, Am I insured against asteroids, meteors and falling satellites?:

Asteroid debris has been known to strike the planet, posing a risk to life and property.

While the likelihood of actually getting struck by a satellite, a meteor or an asteroid is extremely rare, the good news is that if one of these falling objects does hit you, your home, your car or your place of business, you would likely be financially protected by insurance.

Falling objects—including satellites, asteroids, meteors and space debris—are covered under standard homeowners and business insurance policies. These would cover the damage that the falling object causes to the structure of the home or business, as well as to property or belongings that are also damaged or destroyed as a result.

If a satellite, meteor or asteroid falls on your car, coverage is provided under the optional comprehensive portion of an auto insurance policy. And if falling debris causes an auto accident, the liability portion of the policy would cover medical expenses or related lawsuits.

In the event that space debris were to strike a person, medical expenses for his or her injuries would be paid for under health insurance and, in the tragic event of a death, existing life insurance policies would be activated.

The bottom line is that “specified perils” are those that are listed and named in the insurance policy. “Falling objects” coverage is not defined but seems to indicate anything that is causing damage from above. I will elaborate on a couple more insurance cases discussing this “odd peril” tomorrow.

Thought For The Day      

You know you’re getting old when you get that one candle on the cake. It’s like, ‘See if you can blow this out.’

—JerrySeinfeld