Peril

Homeowner’s insurance offers financial protection against damages or personal losses that are the result of a peril.

While many perils are covered by homeowner’s insurance, it is important for policy holders to fully understand how their insurance companies define a peril and what specific perils are actually covered by their policies.

Open-Peril versus Named-Peril Coverage

Homeowner’s insurance coverage can be provided on an open-peril, or all-peril, basis or a named-peril basis. An open-peril policy often covers a broad range of perils, and rather than listing those perils covered, the policy will note what perils are excluded from coverage. A named-peril insurance policy will list those specific perils covered by the policy.

Package Coverage versus Peril-Specific Coverage

Homeowner’s insurance falls under the category of package coverage, meaning that it provides coverage for multiple perils. Insurance policies for disasters such as earthquake or flood are known as peril-specific coverage and are available for perils that are excluded from most insurance policies.

Types of Homeowner’s Insurance Policies

There are six types of homeowner’s insurance policies:

• HO-1 Policies: This type of policy provides the most basic coverage for your home and personal property and covers 11 perils:
  1. Fire
  2. Lightening
  3. Windstorm (includes tornadoes and hurricanes)
  4. Hail
  5. Explosion
  6. Riot or Civil Commotion
  7. Damage from Aircraft or Vehicle
  8. Smoke
  9. Vandalism or Malicious Mischief
  10. Theft
  11. Glass Breakages
• HO-2 Policy: This type of policy provides broader coverage and covers the 11 perils covered by an HO-1 policy as well as six additional perils:
  1. Falling Object
  2. Weight of Ice, Snow or Sleet
  3. Building Collapse Caused by Named Perils
  4. Pipes Bursting from Heat or Cold
  5. Overflow of Water from Hot Water Heater
  6. Heating and Air-Conditioning System Malfunction
• HO-3 Policy: This type of policy is referred to as extended or all-risk coverage and covers all perils except those specifically excluded in the policy. Perils commonly excluded from homeowner’s insurance policies include:
  1. Flood
  2. Earthquake
  3. War
  4. Nuclear Accident
  5. Mold
• HO-4 Policy: This type of policy is referred to as renter’s insurance and covers only personal property damaged or lost as the result of the 17 listed perils.
• HO-6 Policy: This type of policy provides coverage for condominiums and covers personal property plus interior walls damaged or lost as the result of the 17 listed perils.
• HO-8 Policy: This type of policy provides coverage for older homes that might not be meet the standards of current codes. This type of policy covers your home and personal property that is damaged or lost as the result of the 11 perils listed included in the HO-1 policy. A key difference in an HO-8 Policy is this policy will not cover the cost to rebuild the home because the total rebuilding costs are likely to exceed the market value of the home.