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

While many situations are covered by homeowner's insurance, it is important for consumers to fully understand how their companies define a peril and what specific instances are actually covered by their policies.

The Two Main Considerations

Coverage can be provided on an open-peril or a named-peril basis. An open-peril policy often covers a broad range of instances, and rather than listing those that are looked after, the policy will note which ones are excluded. A named-peril offering will list those specific aspects included in the plan.

Homeowner's insurance falls under the category of package coverage, meaning that it provides protection for multiple hazards. Policies for disasters such as earthquake or flood are known as peril-specific plans and are available for situations that are excluded from most offerings.

Types of Policies

There are six types of homeowner's policies: