Don’t let the language of analysis
create confusion over coverage
The primary concern to policyholders is which perils—
causes of loss—are insured or excluded under the policy.
How they arise and relate to other perils and conditions is secondary, if they care at all.
By Joseph S. Harrington, CPCU
Insurance relies heavily on the careful—one could say exacting—use of words to identify what’s covered and what’s not. That’s not to say we can’t employ generalizations and verbal shorthand at times, lest we be forced to converse in the stilted prose of policy forms.
It’s important, however, never to let casual phrasing obscure precise understandings of coverage. Doing so would create hard feelings at difficult times between those who sell insurance and those who buy it. It could even serve to expand coverage beyond what was intended if an insured can convince a court that it was led to believe coverage under a policy was broader than the language indicated.
To avoid misunderstandings and misinterpretations, agent and brokers may want to pay some attention to the current discussion among carriers and actuaries about “primary” and “secondary” perils in property insurance.
What are they talking about?
If you’ve heard the term “secondary perils” but don’t know what it means, you’re not alone. It’s a term often tossed about with conflicting meanings or none at all.
For example, an April 2025 report from AM Best boldly highlights on its opening page that “Increased frequency of secondary perils has led insurers to reassess pricing models, underwriting strategies and risk management plans.” But nowhere does the report tell us what a secondary peril is.[1]
That omission seems odd, as an AM Best analyst, addressing an actuarial meeting three years previously, distinguished between low-frequency, high-severity “primary” (or “peak”) perils, and higher-frequency, lower-severity “secondary” (or “non-peak”) perils.[2]
Primary perils are said to include earthquakes, tropical cyclones/hurricanes, and sometimes wildfires. Some analysts categorize wildfires as a secondary peril, however, along with floods and severe convective storms.[3] To make matters murkier, there are “secondary effects” of primary perils, such as storm surges and inundations caused by hurricanes, earthquake-induced tsunamis, and fire following an earthquake.
What is clear—or should be—is that talk of primary and secondary perils applies to statistical models and loss estimates, not whether damage is covered or not under a property policy. Hanging over the discussion is the question of whether and how climate change is affecting weather patterns and resulting storm losses.
So, what is a peril?
For those buying and selling property insurance, what matters is that a peril is a natural or manmade force that causes immediate damage to property. It matters not whether the peril is primary or secondary in an analytical framework, only whether it is an immediate, or proximate, cause of the loss.
Certain conditions may cause perils, but they are not perils themselves. Neither global warming nor El Niño are perils, although each may lead to an increase in hurricane frequency and intensity. Only when hurricane wind makes landfall and strikes property does it become a peril.
Describing a secondary peril as a derivative of a primary peril risks serious confusion over coverage. A flood that results from hurricane inundation or storm surge is still a flood, and any resulting flood damage is still commonly excluded. A fire following an earthquake is still a fire, and therefore commonly covered.
Regarding manmade losses, “terrorism” is not a peril. If someone spreads leaflets threatening to bomb a civilian district, they’re engaging in terrorism, but there’s no peril until they’ve actually triggered an explosion. An explosion is a peril, whether done so deliberately or accidentally. Terrorist motivations are irrelevant to determining the peril or its damage; they’re relevant only for purposes of providing coverage under certain endorsements and public coverage programs.
Concurrency matters
Rather than classifying perils as primary and secondary, property coverage cares only if two perils occur “concurrently.” If a policy includes an “anti-concurrent causation” provision, and damage results from both a covered peril and an excluded peril, there is no coverage. For example, excluded flood damage would still be excluded, even if the flood was caused by a covered hurricane. It doesn’t matter if one results from the other.
The primary concern to policyholders is which perils—causes of loss—are insured or excluded under the policy. How they arise and relate to other perils and conditions is secondary, if they care at all.
[1] AM Best, Special Report: US Weather Event Risks Highlight Need for Stress Testing,” April 24, 2025; accessed at https://www3.ambest.com/ambv/sales/bwpurchase.aspx?record_code=353292&altsrc=
[2] David Blades, “The Growing Impact of Secondary Perils,” 2022 Casualty Actuarial Society – Spring Meeting
May 17, 2022; accessed at https://www.casact.org/sites/default/files/2022-06/CS-27-Secondary_Perils-1.pdf
[3] Guy Carpenter, “Secondary perils can take on primary importance from a reinsurance perspective,” October 2024; accessed at https://www.guycarp.com/content/dam/guycarp-rebrand/insights-images/2024/10/12_Guy_Carpenter_viewpoint_secondary_perils_FINAL.pdf
The author
Joseph S. Harrington, CPCU, is an independent business writer specializing in property and casualty insurance coverages and operations. For 21 years, Joe was the communications director for the American Association of Insurance Services (AAIS), a P&C advisory organization. Prior to that, Joe worked in journalism and as a reporter and editor in financial services.
