Hollay Ghadery Last Updated On: August 4, 2023

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What Perils Does Homeowners Insurance Cover?

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As if trying to buy a home in this market didn’t feel perilous enough, there are some things called home insurance perils to make the endeavor feel even more trepidatious. But the good news is that home insurance perils actually serve to protect against certain incidents and accidents, effectively alleviating worry from your mind.

So what are home insurance perils, exactly?

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Understanding Home Insurance Perils

Simply put, a home insurance peril refers to an unexpected occurrence that damages your home or belongings. Examples include wind, hail, theft, fire, vandalism, and lightning.

But there are perils your home insurance will not cover you against, like damage that’s the result of earthquakes, flooding, wear and tear, pests and vermin, and inadequate maintenance. These are called insurance exclusions. 

Home insurance policies also don’t generally cover mold, either, because mold is considered preventable if the homeowner practices good maintenance. The only time mold might be covered is if it is the direct result of a covered peril, like the accidental water overflow. Always be sure to check with your provider to understand the exact perimeters of your home insurance coverage. 

Understanding Types of Home Insurance Perils: Named and Open Perils

Home insurance perils are further categorized into named perils or open perils, and your home will be covered on a named or open peril basis. Which it is depends on how comprehensive your homeowners insurance policy is. 

Named perils. If you have a named perils policy, this means your home and property is protected against the usual 16 perils outlined in the majority of home insurance policies. So, quite literally, you’re only covered against perils named in your policy. 

Named perils include:

  • Explosions
  • Smoke
  • Theft
  • Vandalism or malicious mischief
  • Windstorm and hail
  • Fire or lightning
  • Civic commotion or riot
  • Falling objects
  • Weight of ice, snow, or sleet
  • Sudden tearing/cracking of appliances
  • Volcanic eruption
  • Damage caused by vehicles
  • Damage caused by aircraft
  • Power surges
  • Accidental discharge/overflow of water
  • Freezing

When you file a claim listing one of these perils as the cause of damage, it is your responsibility to prove to your insurance company that the peril caused the damage. So, the onus is on you. If you can’t prove it, you won’t get your funds. 

Open perils. Also known as all perils or all risk coverage, this kind of home insurance peril protection means you are covered for perils except those perils listed specifically in your policy. If you submit a claim with open home insurance perils, it is the responsibility of the insurance provider to prove that the loss or damage is not covered by your policy.

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Home Insurance Perils: Different Perils, Different Policies

Here’s the thing: because there are different types of home insurance policies, there are different approaches to peril coverage in each type. 

What are the three types?

The three main types of homeowners insurance policies include H0-2, H0-3, and H0-5. 

Let’s look into each one and how perils are covered. 

In an HO-2 policy, your coverage is the most limited. Also called a broad form policy, H0-2 coverage costs the least but also covers the least. It covers your home, additional structures, as well as your belongings on a named peril basis. 

Learn more about HO-2 insurance. 

If you have an HO-3 policy, your home is covered on an open peril basis and your belongings are covered on a named peril basis. This home insurance type is the most common, and may also be referred to as a special form policy. 

If you have an HO-5 policy, your home is protected by open peril coverage. Fittingly named comprehensive form coverage, this policy covers home and belongings, openly.

Which Home Insurance Peril Coverage is Right for You?

The best home insurance peril coverage for you depends on a variety of factors, including:

  • Where you live. If you live in an area prone to natural disasters, then open peril protection is probably a good idea. In fact, in California, State Farm and Allstate have stopped selling people new home insurance policies due to the changing climate and the increasing costs of rebuilds. So not only are there exclusions, home insurance is an exclusion, period. Obviously, this is an extreme example, but a good one of how geography can change a lot about your life. 
  • Your belongings. If you don’t have a ton of expensive personal belongings, then you may not need the open peril coverage of an HO-5 plan, and can settle with one of the cheaper options.
  • What you can afford. While it would be wonderful to have open peril coverage on your home and belongings, if you can’t afford the comprehensive coverage, you just can’t afford it. This said, before you write off comprehensive form coverage, make sure to get home insurance quotes from multiple providers. Shop around. Just because you can’t afford it from one provider doesn’t mean you won’t be able to from another. 

We can help. Request a fast and free home insurance quote from us today, and get the peril coverage you want.

The Takeaway: Home Insurance Peril Coverage is Necessary

If you need homeowners insurance (and if you have a mortgage, you will), home insurance peril coverage is necessary. The good news is some degree of protection is already built into your even the most basic coverage. If you need more, then shop around for another policy. Don’t assume that your current provider is giving you the best price.

The fact remains that home ownership is one of the biggest financial decisions most of us will ever make—and it’s an investment that needs to be protected. You’re being here, reading this, and educating yourself about the ins and outs of home insurance perils shows that you prioritize your financial literacy. And trust us: a little financial literacy today can go a long way toward creating a more comfortable financial future.

So give yourself a pat on the back, then make sure you’re getting the best price on your home insurance.

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Hollay Ghadery Hollay Ghadery is a writer and editor who is passionate about financial literacy as a means to personal fulfillment. Hollay has over 18 years of experience creating content about a range of topics related to personal finance, including insurance, investing, banking, and credit cards. When Hollay isn't writing, she's spending time with her four children, two dogs, and three goats.

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