Named Perils

The events that a homeowners insurance policy specifies as covered are called named perils. If any of these perils befall a policyholder's home, the insurer will extend benefits to cover the damages. The most common named perils in house insurance policies include lightning or fire, explosions, windstorms, theft, vehicle damage, and others. Depending on the type of policy the homeowner has, coverage may be limited only to the named perils. These kinds of policies are called named peril coverage. In this post, we'll discuss the most common named perils and explain how named peril coverage works.

Named Peril Coverage

The aforementioned HO-2 policy is an example of named peril coverage, meaning the policy only covers the specific events listed and nothing else. For example, with an HO-2 policy, the damage resulting from an earthquake would not be covered because the event is not explicitly listed in the policy.

Named peril coverage is usually cheaper than other forms of coverage because it limits the insurer's risk.

By contrast, all-risks coverage is the opposite of named peril coverage. Instead of covering only the perils named in the policy, all-risks house insurance covers all possible damage and injuries. The exhaustive coverage of an all-risks policy makes it much more expensive than named peril coverage, but it provides the homeowner with more peace of mind. Many insurers also offer special coverage, which is a hybrid of named peril and all risks coverage. With special coverage, all events are covered except those specifically excluded by the policy.

Supplementing with Named Peril Coverage

Many homeowners use named peril coverage to supplement special home insurance coverage. Policyholders purchase a named peril policy for whatever events the special coverage excludes. For instance, most house insurance policies exclude flood damage, which leaves homeowners in flood-prone areas at risk. To fill this gap in coverage, homeowners can purchase a named peril policy that just covers flooding.

Common Named Perils

One of the most popular types of house insurance policies in the US is called the HO-2 policy, or the broad form. The HO-2 policy covers 16 named perils, including:

1. Lightning or fire
2. Hail or windstorm
3. Damage caused by aircraft
4. Explosions
5. Riots or civil disturbances
6. Smoke damage
7. Damage caused by vehicles
8. Theft
9. Vandalism
10. Falling objects
11. Volcanic eruption
12. Damage from the weight of snow, ice, or sleet
13. Water damage from plumbing, heating, or air conditioning overflow
14. Water heater cracking, tearing, and burning
15. Damage from electrical current
16. Pipe freezing