What are extra-hazardous perils?

Extra-hazardous perils refer to risks that are considered to present a higher likelihood of loss and therefore are not automatically covered under standard insurance policies. Instead, these perils can often be included in insurance coverage through endorsements. An endorsement is an add-on to a policy that modifies the coverage, usually resulting in an additional premium.

This understanding stems from the fact that standard property and casualty insurance policies are designed to cover common risks, but when it comes to extra-hazardous perils—such as certain types of natural disasters, nuclear hazards, or specific industrial risks—the insurance company may require additional compensation for the increased risk involved. This allows the insurer to manage the risk more appropriately while providing the policyholder the option to extend their coverage when they recognize the need for it.

The other choices reflect different aspects of insurance coverage but do not accurately represent what extra-hazardous perils are. Universal coverage implies a standard inclusion that does not apply here, while stating that such perils cannot be insured at all misrepresents how they can be managed through endorsements. Lastly, basic risks generally encompass more common perils that do not require alterations to standard insurance policies.