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- Homeowners insurance covers perils like fire, theft, and falling objects.
- Your policy may cover named perils or all perils except those specifically excluded.
- You'll need to buy an add-on policy for risks like earthquakes or floods.
The average homeowner expects homeowners insurance to do one thing: protect their most expensive asset.
Unfortunately, insurance doesn't offer blanket coverage for everything and anything that could happen to your home. Insurers break down potential risks, known as perils, into two broad categories: named perils and open perils. Here's what they cover.
Definition of home insurance peril
Perils should not be confused with coverages. Both affect your annual premiums. But simply put, perils determine if your homeowners insurance company will pay for damages. Coverages determine what the company will pay for (e.g., rebuilding your home, replacing personal belongings, paying for your hotel if you're displaced, etc.).
Most homeowners insurance policies cover perils like fire, theft, or falling objects. But don't assume "fire" means all fires. Insurance companies break it down further, excluding things like lava (and associated fires) and forest fires in wildfire-prone areas.
Insurance policies come as large packets listing all coverages and/or exclusions, and it's important to read them thoroughly.
Types of homeowners insurance perils
Named perils vs. open perils
A named peril policy covers you for listed events, like a fire, storm, or theft. An open/all peril policy covers any perils that are not explicitly excluded in your policy documents.
Insurance company Lemonade provides the following example of an open peril policy: If an apartment flood ruined your computer, and your policy doesn't specifically say flooding is excluded, your insurance company will have to approve your claim, by default. Of course, this kind of oversight is unlikely to happen, which is why a licensed insurance agent might recommend water backup coverage and flood insurance if you're in a high-risk area.
Common insurance perils covered
Here are a few instances of events that might be considered named peril or open peril:
Named peril coverage | Open (all) peril coverage* |
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*Open peril coverage includes named perils and is more expansive, covering anything not specifically excluded in the policy. HO-5 is open peril. HO-3 and HO-7 policies' open peril coverage applies to dwelling coverage only.
Exclusions and limitations
The exact perils covered by insurance vary between companies and policies. However, there are three things homeowners insurance does not cover regardless of your policy: neglect, maintenance, and intentional destruction.
Insurance companies expect you to take steps to prevent damage and keep your home up to code. So if, for example, your floor collapses and the company finds mold, it may deny your claim as that would be a sign of an unaddressed leak (neglect).
Likewise, home insurance does cover vandalism and other destruction when it's caused by an outside party. However, it will not cover intentional damage caused by the policyholder or other similar parties.
Homes located in disaster-prone areas (hurricanes, tornadoes, and wildfires) may need additional specialty insurance policies. For example, in areas like Florida, Louisiana, or Hawaii, mortgage companies may require flood or hurricane insurance as part of your homeowners coverage or a separate policy. If you're unsure, your insurance agent can review your specific homeowners insurance policy.
How to determine your policy's covered perils
Your insurance broker might quote one of eight policies depending on your home type. For example, HO-6 polices cover condos in a "walls-in" fashion. It does not cover the building, only your internal fixtures, personal belongings, etc. As such, policies are generally much cheaper than a single-family residence policy.
However, you can choose between open and named perils coverage, particularly when shopping for a detached single-family structure.
Policy | Type | Dwelling | Belongings | Peril Type |
HO-1 | Basic* | Yes | No | Peril |
HO-2 | Broad* | Yes | Yes | Peril |
HO-3 | Special | Yes | Yes | Open/Peril** |
HO-4 | Renters | No | Yes | Peril |
HO-5 | Comprehensive*** | Yes | Yes | Open |
HO-6 | Yes**** | Yes | Peril | |
HO-7 | Mobile Homes | Yes | Yes | Open/Peril** |
HO-8 | Older Homes | Yes | Yes | Peril |
How perils affect insurance premiums
An open perils policy comes with a higher premium, but don't confuse it with open-ended coverage. Insurance companies have decades of experience paying claims. So many have excluded the most costly perils that may seem obscure to the average consumer.
Something to note is the tradeoff. If you want more comprehensive coverage with open perils protection for the unexpected, you'll pay more. If you're comfortable with named perils coverage, you'll pay less.
The best way to ensure you don't fall victim to coverage gaps is by working with an experienced professional to get your homeowners quotes.
Customizing coverage for specific perils
Earthquakes, floods, government seizures, mudslides, ordinance updates, sewer backup, and sinkholes are all perils commonly excluded from homeowners insurance. Those will require a policy rider or a separate insurance policy to extend coverage.
If you are unclear about your insurance peril coverage, review your homeowners insurance policy and contact your property and casualty insurance agent. It is recommended that you review your policy coverage yearly. If your homeowners insurance company hasn't provided the level of service you expected, it could be time for you to select a new provider.
You can find our guide on the best homeowners insurance.
Homeowners insurance peril FAQ
An insurance peril is a risk that can cause damage to your home or personal property, such as fire or theft.
A named-peril insurance policy covers only the risks expressly named. An open-perils policy covers all risks except those specifically excluded.
Your insurance policy has a list of covered perils in the plan documents.
