Insurance Quiz: Is It a Peril or a Hazard?
By Jonathan Clements, Director of Financial Education, Citi Personal Wealth Management April 16, 2012 01:00 PM
If you want to save money on insurance, give some thought to the difference between a peril and a hazard.
To companies that sell homeowner's insurance, a peril is something that causes a loss, such as a fire, flood, windstorm, tornado or hurricane. To health insurance companies, broken bones and diabetes may be considered perils. For car insurers, auto accidents are an obvious peril. Some of these perils can't be avoided. But other perils, or at least their effects, can be eliminated or minimized.
That's where hazard - a circumstance that might result in a loss or increase its severity - comes in. Take your home. Flammable liquids or materials in an unsafe location, no smoke alarms and even a slippery floor or front walk may be hazards that can contribute to a loss and possibly also a liability claim. Indeed, if your home is poorly maintained, it may violate the terms of your homeowner's insurance, which could mean your policy might not be renewed and could even be cancelled.
Similarly, you'll pay more for auto insurance if you have a poor driving record or own a "high performance" sports car. On the health front, if you smoke, are overweight or don't exercise, you'll probably pay more for health and life insurance.
The bottom line: Anything you can do to minimize hazards - maintain your home, don't smoke, watch your weight, exercise regularly and drive safely - could help reduce your premiums for home, health, car and life insurance.
INVESTMENT AND INSURANCE PRODUCTS: NOT FDIC INSURED • NOT A BANK DEPOSIT • NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY • NO BANK GUARANTEE • MAY LOSE VALUE
The information set forth was obtained from sources believed to be reliable, but we do not guarantee its accuracy or completeness.
A change to your current insurance policy may incur charges, fees and costs. A new life or disability insurance policy will require a medical exam.
© 2012 Citigroup Inc. Citi Personal Wealth Management is a business of Citigroup Inc., which offers investment products through Citigroup Global Markets Inc. ("CGMI"), member SIPC. Insurance products are offered through Citigroup Life Agency LLC ("CLA"). In California, CLA does business as Citigroup Life Insurance Agency, LLC (license number 0G56746). Citibank, N.A., CGMI and CLA are affiliated companies under the common control of Citigroup Inc. Citi and Citi with Arc Design are registered service marks of Citigroup Inc. or its affiliates.