Having insurance in place is essential and protects your home from a variety of hazards. Anything can happen, so preparing for the unexpected is a must. While you never want to use it, keeping an active policy in place will prevent you from experiencing a big loss that can home with a high price tag. To better understand the coverage you have for your home, learning about the perils that are covered will give you an idea of how comprehensive your policy is. Not all insurance covers the same perils, so learning the difference can prevent you from filing a claim and realizing the situation will not be covered.
- When it comes to perils, there are two types of coverage: named-peril and open-peril plans.
- Named perils coverage protects against specified perils.
- Open perils coverage protects against all perils unless they are specifically excluded.
What are perils?
Perils are the dangers that can cause damage to your home. Depending on the type of policy you have in place, the coverage will extend to cover these perils in case you must file a claim. Figuring out what is covered and what is not will help you select the right insurance policy. You will also be able to add endorsements that provide additional coverage if one of the perils you are concerned about is not listed. The most common perils are as follows:
- Fire and smoke
- Lightning
- Windstorms and hail
- Explosions
- Vandalism
- Damage from a vehicle or aircraft
- Theft
- Falling objects
- Weight of ice/snow
- Water damage
When you have a homeowners insurance policy, you will find that it is either a named peril policy or an open peril policy. If your policy covers named perils, you will be able to file claims against any of the above damages. These are the most standard, and they will be listed on your policy for clarity.
If the coverage you have is open peril, this is also known as an all-risks policy. This means the policy will cover any peril unless it is specifically excluded. It is a much broader form of coverage, so you can expect a policy with open perils to cost more money. You can ask your agent to quote you for both to see how they compare.
Which perils are covered by home insurance?
Depending on where you live, you are going to have a specific type of insurance policy that will cover various perils. Since there are many different policies suitable for each dwelling, learning about each one will give you an understanding of which ones are applicable to you and what kinds of perils they cover.
HO-1: Basic homeowners policy with 10 named perils
This is a form of homeowners insurance that offers minimal coverage. These are the 10 basic perils covered by HO-1:
- Fire and smoke
- Lightning
- Windstorms and hail
- Explosions
- Vandalism
- Damage from a vehicle or aircraft
- Theft
- Falling objects
- Weight of ice/snow
- Water damage
It is not recommended to most homeowners because of its strict limitations. The only perils it covers are named, and the insurance will not cover anything beyond this.
HO-2: Broad homeowners policy with 10 named perils
HO-2 policy only covers specifically named perils. It provides more protection than the HO-1 policy but not as much protection as the HO-3 policy. The 10 basic covered perils above are included as they are in the HO-1 policy, and it provides additional protection against these perils:
- Riots/civil commotion
- Glass breakage
- Pipe freezing
- Volcanic eruption
- Electric current
HO-3: Standard hybrid homeowners policy
An HO-3 policy is the most common form of homeowners insurance. When it comes to dwelling coverage A and other structures coverage B, HO-3 is an open perils policy, which means that all perils are covered unless they are specifically excluded from the policy. This provides you with extensive protection and covers open perils for your dwelling and other structures. However, the personal property coverage C only extends to 16 named perils. That’s why HO-3 is sometimes called a hybrid policy because it has some qualities of both open-perils and named-perils plans.
HO-4: Renters insurance policy
Getting renters insurance is a lot like getting a homeowners policy. The coverage is very similar to the HO-3 policy, but it is structured as a named perils policy. There are 16 named perils included. It is the most extensive form of coverage that people who are renting typically choose to hold.
HO-5: Premium open-peril homeowners policy
Choosing an HO-5 policy means you get open perils coverage with additional coverage options included. This policy costs more than the standard home insurance policy, so many do not opt for it. The HO-5 policy has open perils coverage for your dwelling, other structures, and personal property. The HO-3 policy only covers 16 perils for your personal property.
HO-6: Condo policy with 16 named perils
This is a policy similar to an HO-3, except it covers units that are owned instead of dwellings. It operates on a named perils basis and covers 16 named perils. Choosing an HO-6 condominium policy is the most common decision for condo or co-op owners.
HO-7: Mobile home insurance policy
This is an open perils policy specifically designed for mobile homes. Those who own single-wide trailers, double-wide trailers, and manufactured homes would choose this type of policy. It is designed to protect this particular style of home.
HO-8: Homeowners policy for older homes
This is a very specific type of policy that covers older homes with replacement costs that are worth more than the current structure. It is a named perils policy, so only the specific perils listed will be covered.
Also Read: Coverages A, B, C, D, E, And F for Home Insurance
Perils Excluded from Homeowners Insurance Policies
There are a few perils that are typically excluded from any type of homeowners or renters policy.
- Flooding and earthquakes are two of the most common. These perils can be covered by separate policies that are designed specifically for these instances. Any damage caused by a flood or an earthquake will not be covered because of the origin of the damage. If you live in an area prone to these natural disasters, getting these additional coverages is a smart idea.
- Maintenance work and pests are also commonly excluded from insurance policies. If you need to update the appliances in your home because they are old, you will not be able to file a claim with your homeowners insurance policy to do this. You will also not be able to file a claim if you experience a pest infestation. These instances are seen as preventable or the responsibility of the homeowner, so they are usually excluded from insurance policies.
Understanding what your policy actually covers will better prepare you for the future. When you know that you have the best coverage in place and any additional endorsements or separate policies to go with your homeowners insurance, you will feel confident in the safety of your home.
