Insurance peril definition
In homeowners insurance and other types of property insurance, a peril refers to an event that causes damage or loss to your property. There are covered perils, meaning the type of damage or loss is covered by the insurance policy; and there's perils that are not covered — also known as insurance exclusions.
For example, a typical home insurance policy will generally reimburse you for damage caused by fire, wind, hail, and several others, but most policies won't cover damage due to flooding, earthquakes, normal wear and tear, or neglect and poor maintenance.
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Open perils vs. named perils insurance
Depending on how comprehensive or limited your homeowners insurance policy is, your home or belongings will either be covered on a named peril or open peril basis.
Named perils: This means your property is covered against the 16 perils specifically listed in the insurance policy. When you file a claim with named perils coverage, the onus is on you to prove the damage or loss was caused by one of the 16 perils in your policy.
Open perils: Known interchangeably as all risks or all perils coverage, open perils means you’re covered against all causes of loss except the specific listed in your policy. When you file a claim with open perils coverage, the burden of proof falls on the insurer to prove the damage or loss is not covered by your policy.
How perils are covered by each type of home insurance
There are three common types of homeowners insurance policies: the HO-2, HO-3, and HO-5. Each one has a slightly different level of coverage, with the HO-2 being the most limited, and the HO-5 being the most comprehensive.
HO-2 policy: Also known as a broad form policy, HO-2 insurance is the cheapest and most limited coverage option. It covers your home, additional structures, and belongings on a named perils basis.
HO-3 policy: Also known as a special form policy, HO-3 insurance is the most common type of home insurance. Your home is protected on a more comprehensive open perils basis, while personal belongings are covered on a named perils basis.
HO-5 policy: Also known as a comprehensive form policy, HO-5 insurance is the most comprehensive type of homeowners insurance. It protects your home and belongings on an open perils basis.
Insurance type | Coverage for your home and other structures | Coverage for your personal property |
|---|---|---|
HO-2 | Named perils | Named perils |
HO-3 | Open perils | Named perils |
HO-5 | Open perils | Open perils |
What are examples of covered perils in home insurance?
The following perils are generally covered in a standard homeowners insurance policy. That means if one of the following causes damage or loss to your home or belongings, you can make a claim with your insurance company to be reimbursed for repairs or replacement costs.
1. Fire or lightning
2. Windstorm and hail
3. Explosions
4. Riot or civil commotion
5. Damage caused by aircraft
6. Damage caused by vehicles
7. Smoke
8. Volcanic eruption
9. Vandalism and malicious mischief
10. Theft
11. Falling objects
12. Weight of snow, ice, or sleet
13. Accidental discharge/overflow of water
14. Sudden tearing/cracking of appliances
15. Freezing
16. Power surges
Covered perils in homeowners insurance — explained
Here’s a detailed breakdown of perils that are commonly covered under a standard home insurance policy.
Fire and smoke
A standard policy covers your home, other structures on your property, and your personal belongings if they incur fire or smoke damage. If you need to live somewhere else while your home is being repaired or rebuilt, homeowners insurance can also cover your additional living expenses. This includes hotel stays, restaurant meals, and pet boarding costs.
Windstorms
A standard home insurance policy covers damage caused by wind and hail. However, if you live in an area prone to natural disasters such as tornadoes and hurricanes, your policy may have restrictions or exclusions related to wind or hail damage.
Lightning strikes
Your home and belongings are also covered against lightning strikes. If lightning strikes a tree on your property and it falls onto your home, homeowners insurance will likely cover its removal and house repairs. If a lightning strike hits a power line, causing a power surge and frying your electronic appliances, insurance will likely pay to replace your damaged possessions.
Theft
Homeowners insurance can also pay to replace your belongings, whether they’re stolen from your home or hotel room. Certain expensive valuables, like jewelry, firearms, or art, are only insured up to a limited amount — typically $1,500. However, most insurers will let you increase coverage limits or add a scheduled personal property coverage endorsement for an additional fee.
Sudden, internal water damage
Homeowners insurance generally covers water damage when it’s sudden and internal. This means if a burst pipe floods your basement or your well pump is damaged in a fire, you’ll likely be covered for repairs.
Falling objects
If a tree falls onto your home, home insurance will likely pay for its removal and house repairs.
Weight of snow or ice
If an ice dam or snow buildup causes your roof to cave in, your policy should cover the cost of roof replacement or repairs.
Check your insurer’s selection of coverage endorsements
Most insurance companies offer optional home insurance add-ons, or endorsements, that can cover losses not normally covered under a standard policy. For example, a basic policy doesn’t cover water damage caused by sewer backups or sump pump overflows. However, coverage is provided if you add a water backup coverage endorsement to your policy.
What perils are not covered by homeowners insurance?
Your policy will also include a list of exclusions — these are perils that are not covered by homeowners insurance.
Flooding
Most standard home insurance policies won’t cover water damage caused by outside flooding. Additionally, water damage caused by sewer backups or seepage are excluded from coverage. To cover your home and belongings from flooding, you’ll need separate flood insurance.
Earthquakes
Damage caused by earth movement — meaning earthquakes, tremors, landslides, mudslides, subsidence, and sinkholes — are also not covered by most standard policies. Coverage may be available via an endorsement or separate earthquake insurance.
Normal wear and tear or lack of maintenance
Homeowners insurance generally won’t cover internal water damage caused by neglect or poor maintenance. So if your home has an obvious mold problem, or if an exposed pipe leaked over the course of months and caused extensive water damage, you likely wouldn’t be covered.
Pests or vermin
Additionally, damage caused by pests — including rodents, termites, bed bugs, and birds — are also excluded from coverage. Home insurance also won’t pay for pest removal.
Ordinance or law
A standard policy also won’t cover losses associated with the government’s enforcement of local building codes. That means if the government requires you to demolish, repair, renovate, or remodel your home to meet local building ordinances, insurance won’t cover the costs.
While most policies provide a limited amount of ordinance or law coverage, it only kicks in if your house is damaged by a covered peril. This coverage is generally 10% of your policy’s dwelling coverage.
Frequently asked questions
Is mold a covered peril?
Homeowners insurance typically doesn’t cover damage caused by mold or mold removal. That is because mold is considered preventable damage that could be avoided with proper maintenance and upkeep. The only time homeowners insurance might cover mold removal is if the underlying cause was a covered peril — like if a pipe suddenly bursts and the water damage directly causes a mold infestation.
What are named perils?
If you have a named perils policy, that means you’re only protected from the named perils listed in your homeowners insurance policy. With a standard homeowners insurance policy, your personal property is protected against 16 named perils.
