What Are Perils in Home Insurance?

Home insurance provides financial protection for a home and its contents against unexpected events. Perils are the specific events or causes of loss that an insurance policy is designed to either cover or exclude. Understanding perils is key to comprehending the scope of home insurance protection.

Defining Perils and Coverage Types

In home insurance, a “peril” is an event or cause of loss resulting in property damage or liability. These events range from natural occurrences to human-made incidents. Policies categorize these into named perils and open perils.

Named perils coverage protects only against events explicitly listed in the policy. If an event is not enumerated, any resulting damage or loss is not covered. The policyholder must prove the loss was caused by a specified peril.

Open perils coverage protects against all causes of loss unless specifically excluded. The insurance company must prove an exclusion applies to deny a claim. Open perils coverage is broader.

Common Covered Perils

Common perils covered by standard home insurance policies include fire and lightning damage (flames, smoke, heat, direct lightning). Windstorm and hail also cover damage to roofs, siding, and windows from severe weather, including wind-driven rain or snow.

Policies cover explosion from sudden, violent forces (e.g., aerosol cans, propane grills), riot or civil commotion damage, and impact from aircraft or vehicles. Sudden smoke damage from a faulty furnace or fireplace is also covered.

Vandalism and malicious mischief cover intentional damage (e.g., graffiti, broken windows). Theft covers personal property loss. Falling objects (e.g., trees, branches) and damage from the weight of ice, snow, or sleet (including roof collapses) are covered.

Common covered perils also include:
Freezing of plumbing, heating, AC, sprinkler systems, and appliances, causing burst pipes.
Accidental discharge or overflow of water/steam from plumbing, heating, or AC systems, if sudden and accidental.
Sudden tearing, cracking, burning, or bulging of hot water or heating systems.
Sudden damage from electrical current, like power surges.

Common Excluded Perils

Standard home insurance policies exclude certain perils. Flood damage from rising or overflowing water is excluded; a separate flood insurance policy (e.g., NFIP) is typically needed. Earthquake damage from seismic activity is another common exclusion, often requiring a separate policy or endorsement.

Losses due to ordinance or law (e.g., increased repair costs from updated building codes) are excluded unless endorsed. Sewer backup or sump pump overflow from sewers or drains is typically not covered and often requires an endorsement. Direct power failure damage and homeowner neglect are also excluded.

Intentional loss by the insured or a household member is excluded. War or nuclear hazard damage is also excluded. Governmental action, like property seizure or destruction, is another common exclusion.

Movement of ground (e.g., landslides, sinkholes, mudslides) is not covered unless a direct consequence of a covered peril (e.g., explosion); endorsements may be available. Pest infestation damage (e.g., insects, rodents) is excluded. Wear and tear or deterioration are not covered. Mold damage is often excluded unless from a covered peril (e.g., burst pipe).

How Perils Shape Home Insurance Policies

The distinction between named and open perils coverage shapes standard home insurance policy forms. Each form defines protection for dwelling and personal property based on peril types. Understanding these differences is essential for selecting coverage.

The HO-1, or Basic Form, is a limited named perils policy for dwelling and personal property. It typically covers about 10 perils. Most insurers do not sell HO-1 policies, and many mortgage lenders do not accept them.

The HO-2, known as the Broad Form, expands by providing named perils coverage for both the dwelling and personal property. It includes a broader list of perils than HO-1, typically around 16. While broader than an HO-1, an HO-2 provides less comprehensive protection than an HO-3.

The HO-3, or Special Form, is the most common type of homeowner’s policy. This form provides open perils coverage for the dwelling, covering the physical structure and other structures against all perils unless specifically excluded. Personal property coverage under an HO-3 policy is typically on a named perils basis.

The HO-5, or Comprehensive Form, offers the broadest level of coverage among standard policies. It provides open perils coverage for both the dwelling and personal property, covering both the structure and contents against all perils unless explicitly excluded. This makes the HO-5 a more extensive option for maximum protection.

Finally, the HO-8, or Modified Coverage Form, is designed for older homes where replacement cost exceeds market value. It offers named perils coverage for both the dwelling and personal property, typically covering around 10 perils. Losses under an HO-8 are often valued on an actual cash value basis, which accounts for depreciation.