What is a covered peril in homeowners insurance?

A peril is an insurance term that refers to a cause of damage or loss to property. In homeowners insurance, a “covered peril” is an event the insurance company agrees to reimburse you for should you file a claim. Covered perils include fire, lightning strikes, windstorms and hail, weight of snow and ice, theft, and vandalism.

Homeowners insurance also spells out which perils are not covered. Also known as policy exclusions, homeowners insurance generally won’t reimburse you for damage from flooding, earthquakes, pests, basic wear and tear, or intentional acts (like if you burn down your house on purpose).

Insurance companies typically give you the option of modifying or adding coverage to your policy to cover specific causes of loss or scenarios that are excluded under basic homeowners insurance. For example, a standard home insurance policy generally won’t cover water damage caused by sewer backups or sump pump overflows, but adding a water backup coverage endorsement to your policy effectively supplements that gap in coverage.

Examples of covered perils

A standard homeowners insurance policy typically covers at least the following 16 perils:

Types of insurance and perils: what you need to know

There are three main types of homeowners insurance—the HO-2, HO-3, and HO-5—and each policy form has its own distinct basic level of coverage.

The HO-2 provides the most limited protection in terms of how many perils it will cover, protecting your home and personal property with named perils coverage. The most common policy form, the HO-3, provides comprehensive all risks coverage for the structure of your home but the more limited named perils coverage for your personal belongings. The HO-5 provides the most robust perils coverage, covering both your home and personal belongings with all risks, or open perils protection.

All risks, open perils, and named perils policies

Most homeowners insurance policies generally cover the same perils. Losses such as fire damage, water damage from burst pipes, and theft are covered whether you have a named perils HO-2 or an open perils HO-5. But there are distinct differences between the two worth keeping in mind when deciding on coverage.

• Named perils - Means you’re protected from the 16 perils specifically named in the insurance policy. If you file a claim for, say, wind or hail damage to your roof, the onus is on you to prove the damage was caused by a peril that’s mentioned in your policy (in this case, wind and hail) and not something that isn’t covered. It’s possible your insurance company will come back and say the roof was falling apart prior to the storm damage and therefore they aren’t responsible for paying out for the damage. The ability for insurance companies to maneuver their way out of paying a claim with named perils makes this coverage type a risky option for homeowners

• Open perils - Known interchangeably as “all risks” coverage, open perils means you’re covered by everything except the 10 or so perils and scenarios specifically spelled out in the policy. In terms of coverage quality, all risks is considered the best since the burden of proof falls on the insurer to show that coverage is excluded

How you’re covered by each insurance form

What perils are covered by homeowners insurance?

A standard homeowners insurance policy has a section titled perils insured against, and this is a list of your named perils. In an HO-3 policy, your personal property is protected with named perils coverage unless you upgrade your policy to an HO-5.

It’s worth noting that insurance companies have the power to exclude coverage against certain perils if they determine during underwriting that your home is too high risk for them to take on that kind of liability. For example, wind damage from hurricanes is usually covered by homeowners insurance, but insurance companies in high risk coastal counties of Texas and other states may actually exclude windstorm damage from coverage depending on your risk profile. Same goes for fire coverage in wildfire prone areas of California. To supplement that potential gap in coverage, you would need to acquire a special windstorm or fire insurance policy to cover those specific perils.

Fire and smoke

A standard homeowners insurance covers your home, other structures on your property, and your personal belongings if they’re damaged in a fire or incur smoke damage. If you need to live somewhere else while your home is being repaired or rebuilt, homeowners insurance will also cover your additional living expenses (this goes for any covered peril).

Windstorm and hail damage

A standard policy also covers damage caused by windstorms or hail, even when caused by a natural disaster like a tornado or a Category 3 hurricane. In addition to covering the wind damage itself, homeowners insurance also covers water damage from wind-driven rain if a windstorm causes an opening in your roof, windows, or foundation.

Lightning strikes

Homeowners insurance also covers damage caused by lightning strikes. If lightning hits a tree and causes it to fall onto your home, homeowners insurance will likely cover its removal and structural repairs. If a lightning strike hits a power line, causing a power surge and frying your electronic appliances, that’s usually covered as well.

Theft and vandalism

If a thief breaks into your home and steals your stuff, homeowners insurance will reimburse you for the loss. Certain valuables like jewelry, art, silverware, and guns are only insured up to a limited amount (usually $1,500 or $2,500 per item category) in a basic policy, but additional coverage is usually available if you want higher coverage limits for certain items. If your home or personal property are damaged or destroyed by vandalism or malicious mischief, that is also covered by homeowners insurance.

Water damage from burst pipes

Homeowners insurance covers water damage caused by “accidental discharge” of water or steam, meaning you’ll likely be covered if a burst pipe floods your basement and damages your stuff.

Falling objects

If a healthy tree falls onto your home due to a storm or weight of snow or ice, you’re covered for the tree’s removal and any resulting repairs.

Weight of snow or ice

If an ice dam or a simple accumulation of snow on your roof causes it to fall in and damage your property, homeowners insurance may reimburse you for a new roof and any property inside that was damaged.

What perils are not covered by homeowners insurance?

Your homeowners insurance policy will also list several perils that aren’t covered. Perils not covered by insurance will be mentioned in the exclusions section of your policy. Typical causes of loss not covered by homeowners insurance include:

Flooding and water damage

Flooding is typically excluded from standard homeowners insurance policies. Flooding in this case refers to water flowing in from the outside, a sewer or drain backup, or groundwater or surface water seeping up into your home’s foundation. To cover your home against flooding, you’ll need separate flood insurance.

Earthquakes

Damage caused by earth movement—earthquakes, tremors, landslides, mudslides, subsidence and sinkholes—are also excluded from a standard policy. You’ll need to add an earthquake endorsement or purchase a separate earthquake policy for protection.

Lack of maintenance

Pest damage from rodents, termites, bed bugs, and birds are also excluded from homeowners insurance. In addition to infestations, insurers also exclude anything they deem “neglect”, including mold growth that is slow growing and obvious, roof damage if the roof is over 20 years old, and any other type of damage that can be attributed to a lack of maintenance.

Ordinance or law

The ordinance or law exclusion refers to ordinances or laws that stipulate that you demolish, repair, renovate or remodel your home to meet local building ordinances. Basically, the costs of anything home-related that address a government-sanctioned law or ordinance are not covered. However, most major insurance companies offer ordinance or law coverage endorsements that you can add onto your policy for a small additional premium. Some companies may also include a limited amount of ordinance or law coverage (typically $10,000) in the base policy.