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Mar 1, 2025

What Are Covered Perils in Home Insurance?

Home insurance covers specific risks, called "covered perils", to protect your property from unexpected events like fire, theft, or storms. Here's what you need to know:

Two Types of Policies:
- Named Perils: Covers only risks explicitly listed in the policy.
- Open Perils: Covers everything except what’s specifically excluded.
Common Covered Perils:
- Natural Events: Fire, lightning, windstorm, hail, weight of ice/snow.
- Accidents: Explosions, sudden water damage, frozen plumbing.
- Criminal Acts: Theft, vandalism, riots.
- External Factors: Damage from aircraft or non-owned vehicles.
Key Exclusions:
- Floods, earthquakes, mold, pests, and wear and tear are typically not covered.
Additional Coverage Options: Add-ons like flood insurance, sewer backup, or coverage for high-value items can fill gaps in standard policies.

Quick Tip: Review your policy annually, update your home inventory, and consider local risks to ensure you’re fully protected.

Understanding Homeowners Insurance: Open Perils vs. Named Perils Explained

What Is a Peril in Insurance?

In home insurance, a peril refers to an event or situation that can cause damage to your property and lead to financial loss. These are unexpected occurrences - like fire or strong winds - that can harm your property.

"In homeowners insurance, a peril is an event that may cause property damage and financial loss to the policyholder."

This definition highlights how insurance policies protect homeowners from specific risks.

Homeowners insurance generally comes in two types of coverage:

Named Perils Policies: These only cover events specifically listed in the policy. If damage occurs, you’ll need to show that a listed peril caused it.
Open Perils Policies: Often called "all-risk" policies, these cover everything except what’s explicitly excluded. In this case, insurers must prove that an exclusion applies.

Most standard homeowners insurance policies cover a range of common perils, such as:

| Category | Common Covered Perils |
| --- | --- |
| Natural Events | Fire, Lightning, Windstorm, Hail, Weight of ice/snow |
| Accidents | Explosion, Accidental water damage, Frozen plumbing |
| Criminal Acts | Theft, Vandalism, Riot damage |
| External Factors | Aircraft damage, Vehicle damage (non-owned)

For instance, if a pipe suddenly bursts, the resulting water damage is typically covered. However, damage from a slow, ongoing leak usually isn’t. Similarly, storm-related wind damage is often included, but flood damage requires a separate policy.

Insurance coverage is based on risk assessments and how much risk homeowners are willing to take on themselves. Hazards also play a role in increasing the likelihood of perils. For example, outdated electrical wiring can raise the risk of a fire.

It’s essential to review your policy to understand what’s excluded and decide if additional coverage is needed.

Standard Covered Perils

Home insurance policies typically protect against several common risks. Let's break down the key perils that are usually included in standard coverage.

Fire and Smoke

Fire and smoke damage are core protections in most home insurance policies. This includes damage caused by kitchen fires, electrical issues, lightning strikes, and smoke-related harm. Coverage often extends to professional cleaning and restoration services needed after such incidents.

Wind and Hail

Wind and hail cause billions of dollars in damage annually across the U.S. For example, Florida has the highest number of wind and hail claims nationwide. In areas like Tornado Alley or the Great Plains, insurers may require separate deductibles specifically for wind or hail damage.

Plumbing and Water Damage

Plumbing-related damage is a frequent issue, with the average claim reaching $11,650. However, coverage depends on the nature of the damage. Here's a quick breakdown:

| <strong>Covered Water Damage</strong> | <strong>Excluded Water Damage</strong> |
| --- | --- |
| Sudden pipe bursts | Gradual leaks |
| Accidental washing machine hose breaks | Foundation-related pipe damage |
| Burst overhead sprinklers | Sump pump failures |
| Water pipe bursts in properly heated homes | Flooding from external sources

Insurance typically covers sudden, accidental damage but excludes issues caused by neglect or wear and tear.

Lightning

Lightning protection includes coverage for structural damage from direct strikes, electrical surges affecting appliances, fire caused by strikes, and power surges impacting home systems. It's a crucial safeguard for both the structure and electronics in your home.

Theft and Property Crime

Theft protection is included under Coverage C (Personal Property), typically amounting to 50%–70% of your dwelling coverage limit. This covers theft, break-ins, vandalism, and some cash losses. It also extends to personal property stored outside the home, up to 10% of Coverage C or $1,000, whichever is greater. Be aware of the vacancy clause - coverage is void if the home is unoccupied for more than 60 consecutive days.

Named vs. Open Perils

Let’s break down the details of these two policy types to help you understand what they cover and how they differ.

Named Perils Policies

Named perils policies cover only the risks specifically listed in the policy. If a loss occurs, you’ll need to show that a covered event caused the damage.

"With a named peril policy, coverage will only be applied to the specific risks named within that policy." - AmFam Team

To avoid surprises when filing a claim, it’s a good idea to review your policy with a licensed insurance agent and confirm which events are covered.

Open Perils Policies

Open perils policies work differently - they cover everything except what’s explicitly excluded. In this case, it’s up to the insurance company to prove that an exclusion applies.

"Almost directly opposite to a named perils policy, open perils coverage offers risk coverage for any loss that's not specifically listed as an exclusion in the policy." - AmFam Team

Because of their broader coverage, many mortgage lenders require homeowners to carry an open perils policy.

Policy Type Comparison

Here’s how these two policies stack up:

| Feature | Named Perils | Open Perils |
| --- | --- | --- |
| Coverage Scope | Covers only listed risks | Covers everything except exclusions |
| Cost | Lower premiums | Higher premiums |
| Burden of Proof | Homeowner must prove a covered peril caused the damage | Insurer must prove the damage is excluded |
| Flexibility | Specific coverages can be added | Generally includes broad coverage |
| Common Usage | Popular with budget-conscious homeowners | Often required by mortgage lenders

Both types of policies can be tailored with endorsements or riders to cover risks like floods or earthquakes, which are often excluded from standard policies.

When deciding between these options, think about factors like your home’s location, its value, and the risks it faces. The right choice can help you protect your property and get the most out of your coverage.

Policy Exclusions and Add-ons

Common Exclusions

Home insurance policies don’t cover everything. It’s important to understand what’s not included to avoid surprises. Here are some of the key exclusions in most standard policies:

Natural Disasters

Floods aren’t covered; you’ll need separate coverage through the NFIP.
Earthquake coverage requires a separate policy.
Damage from landslides or mudflows isn’t included in standard plans.

Other Issues

Mold damage is excluded unless it’s caused by a covered event.
Damage from pests, like termites or rodents, isn’t covered.
Normal wear and tear or gradual deterioration of your home is not included.

"The exclusions of your insurance policy should be in your paperwork. You can also talk to your company or agent to get a better sense of what is excluded." - Natalie Todoroff, Writer, Insurance

Extra Coverage Options

To fill in the gaps left by standard policies, insurers offer additional coverage options. These add-ons can provide protection for specific risks:

| <strong>Coverage Type</strong> | <strong>What It Covers</strong> | <strong>Why It’s Useful</strong> |
| --- | --- | --- |
| Sewer Backup | Damage from backed-up drains | Especially important for older homes |
| Service Line | Repairs to underground utility lines | Covers costly repairs |
| Building Ordinance | Upgrades to meet current building codes | Critical for older properties |
| Scheduled Personal Property | High-value items beyond standard limits | Ideal for jewelry, art, or collectibles |
| Home Business | Business equipment and liability | Essential for home-based businesses |
| Sump Pump Overflow | Water damage from pump failure | Protects basements from flooding

"Insurance policy add-ons allow homeowners to expand the list of covered perils in their coverage. For a small increase in premiums, policyholders can include benefits that were previously excluded from the policy." - Demont Insurance

Check your policy documents to see if any of these add-ons make sense for your situation.

Reading Your Policy

Take the time to review your policy carefully. Pay attention to exclusions, coverage limits, and any regional differences. Even for covered risks, there are often financial caps. For instance, claims related to dog injuries - totaling over $1 billion in 2023 - averaged $58,000 per claim.

If you’re unsure about anything, consult a licensed agent. Companies like Quality Restoration NW LLC can also assist with navigating claims for water or fire damage.

Getting the Most from Your Policy

Home Inventory

Having a thorough home inventory can help you make the most of your insurance coverage. The National Association of Insurance Commissioners (NAIC) even provides a free app to help you document your belongings. Here's how to create an effective inventory:

Record Key Details: Include purchase prices, serial numbers, model information, and photos or videos of high-value items. Digital receipts are a great addition.
Walkthrough Video: Take a video of your home, focusing on valuable items and their serial numbers as a backup.
Safe Storage: Keep your inventory in a secure location, like cloud storage or an off-site space.

"The best way to identify and overcome potential insurance gaps is to set an annual coverage review with your insurance agent/broker to help ensure that your building property and all of its contents are protected in the event of a disaster." – Adjusters International

Annual Policy Check

After putting together your inventory, it's important to review your policy annually to ensure it stays up-to-date. During these reviews, focus on:

| Review Area | Focus | Benefit |
| --- | --- | --- |
| Property Changes | Renovations, additions, new systems | Reflects changes in home value |
| Personal Property | New purchases, inherited items | Keeps coverage limits accurate |
| Coverage Gaps | New risks or lifestyle changes | Adjusts policy as needed |
| Available Discounts | Security systems, bundled policies | May reduce your premium costs

"They don't think about it until the insurance agent starts asking questions", says Tom Humphreys, director of The Risk Management and Insurance Center and assistant professor at Olivet College in Michigan.

Working with Restoration Services

Once your policy and inventory are all set, professional restoration services can make the claims and repair process much smoother. Companies like Quality Restoration NW LLC simplify the process with services such as:

Direct billing to your insurance company, reducing out-of-pocket expenses
Detailed damage assessments and documentation
Expert negotiation with your insurance provider
Regular updates to keep you informed
Full coordination with adjusters to handle restoration efficiently

Being prepared can make all the difference when you need to file a claim.

Summary

It's important to understand the perils covered by your homeowners insurance to ensure you're properly protected. Named perils require proof that a specific event listed in your policy caused the damage, while open perils cover everything except for events explicitly excluded.

With the average cost to rebuild a home reaching $284,764 in 2022, keeping your coverage up to date is crucial. While standard policies cover many risks, there are key exclusions to be aware of. For instance, FEMA data shows that nearly 25% of flood claims come from homeowners outside of high-risk flood zones.

"A peril is an event, like a fire or break-in, that may damage your home or belongings." - Allstate

To stay protected, make sure to:

Review your policy annually to account for changes.
Consider local risks such as weather patterns or natural disasters.
Update your home inventory regularly to reflect your belongings.
Consult restoration experts like Quality Restoration NW LLC (https://qualityrestoration-nw.com) for guidance.

In 2022, property damage made up nearly 98% of all homeowners insurance claims, with wind and hail damage alone responsible for 40% of those claims. Remember, your coverage is based on rebuilding costs - not market value. Therefore, it's essential to reassess your policy limits regularly, especially as construction costs rise or after making home improvements.