What is an Insurance Peril?

What is a peril as it relates to homeowners insurance?

As it pertains to homeowners (or renters) insurance, a peril is a source or cause of loss. It describes the cause of damage sustained by a home or personal belongings — for example, a fire is a peril. Whether your home insurance policy covers damages caused by certain perils depends on the type of policy you carry. Let’s explore common examples of perils and what classes of homeowners insurance cover which perils.

What types of perils are covered by insurance?

What is and is not covered by your home insurance company is outlined in your policy documentation. Homeowners policies are usually either open peril, named peril, or a combination of the two. 

Open peril homeowners insurance policy

An open policy peril is the most comprehensive classification of homeowners insurance. On an open peril policy, any circumstance excluded from coverage is explicitly stated. If a peril that results in damage to your home or personal belongings is not listed as an excluded peril, you will have coverage. Below are typical hazards or perils excluded from coverage on an open peril policy:

• Freezing pipes and systems in vacant dwellings
• Damage to foundations or pavements from ice and water weight
• Theft from a dwelling under construction
• Vandalism to vacant dwellings
• Latent defects, corrosion, industrial smoke, pollution
• Settling, wear and tear
• Damage caused by owned pets
• Extreme weather conditions
• Government and association actions
• Defective construction, design, and maintenance
• Enforcement of building codes and similar laws
• Earthquake
• Flooding
• Power failures
• Neglect (meaning your failure to take reasonable steps to protect your property)
• War
• Nuclear hazards
• Intentional acts

Because the burden of proof is on your insurance company, an open peril policy is the best way to insure your home and belongings. While most homeowners policies will insure the structure of your home on an open peril basis, your personal property is typically insured on a named peril basis — which we will describe next. Learn more about this type of homeowners policy:

• HO-5 Home Insurance Policy Summary

Named peril home insurance policy

A named peril homeowners policy covers damage caused by circumstances specifically outlined on your policy. These policies are sometimes referred to as “all peril” home insurance. Typically, a named peril covers damage that comes as a result of one of the following 16 causes of loss:

• Lightning or fire
• Hail or windstorm
• Damage caused by aircraft
• Explosions
• Riots or civil disturbances
• Smoke damage
• Damage caused by vehicles
• Theft, malicious mischief
• Vandalism
• Falling objects
• Volcanic eruption
• Damage from the weight of snow, ice, or sleet
• Water damage from plumbing, heating, or air conditioning overflow
• Water heater cracking, tearing, and burning
• Damage from electrical current
• Pipe freezing

If your home or personal belongings were damaged by something other than the damage listed above, you would have no coverage on a named peril basis. A named peril is fairly common for personal content coverage. However, because there is less coverage, we recommend insuring all your assets on an open peril basis.