The number of home insurance policy types can feel endless, so if your home insurance search seems riddled with choices, you aren’t alone. Choosing between broad form and special form policies or named perils, open perils, and all-risk policies can seem overwhelming (even though most of those are just different names for the same types of coverage).

Your home insurance policy is meant to protect your home and your personal belongings from natural disasters, vandalism, and theft. That’s why it’s important to know what’s included in your homeowners insurance coverage and, more importantly, what isn’t.

There are a number of different insurance policies homeowners can choose from, but most insurance policies fall under one of two categories: named perils or all-risk policies. Whether you’re looking for homeowners insurance or renters insurance, the policy that’s best for you simply depends on the type and amount of perils coverage you’re looking for. 

Sorting through all of your home insurance options can be overwhelming, but you don’t have to do it alone. Insurify is here to help you understand the ins and outs of your homeowners insurance policy. Then, you can compare home insurance quotes to see policies and insurers side by side to secure the best home insurance company, insurance policy, and insurance quotes for you in just minutes.

Keep reading for our full guide on named perils insurance to find out what type of policy you need.

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What are named perils?

Every insurance policy is meant to help policyholders in case of various problems. Events (or causes of loss) that leave your home, personal property, and personal belongings lost or damaged are referred to as “perils.” Your home insurance policy covers a range of these perils, depending on the type of policy you hold. 

It’s easy to get confused by insurance terminology, but named perils policies are actually quite simple. 

Named perils policies name the types of perils that are covered—it’s as simple as that. Basic insurance (or HO-1 policies) and broad form insurance (HO-2 policies) are both considered named perils policies because they only provide coverage for damages caused by the listed events. 

For HO-1 policies, the named perils include events like natural disasters, theft, and vehicles. HO-2 policies include the same coverage as HO-1 policies, plus a little more. These broad form policies include what are known as the “16 named perils” because there are 16 total events that the policies cover. See? The different types of policies aren’t as complex as they can seem.

Other policies offer open perils coverage, known as all-risk policies, but we’ll get into the nitty-gritty about open perils policies in a bit. 

The 16 Named Perils

Now that you know what a named perils policy is, you can better understand what these policies cover. No matter which insurance company you choose, your named perils policy will include coverage for damages caused by 16 named perils (with very few exceptions).

These perils are as follows:

  • Fire and lightning
  • Windstorm and hail
  • Volcanic eruption
  • Explosion
  • Smoke
  • Weight of ice and snow
  • Riots
  • Aircraft
  • Vehicles
  • Vandalism
  • Theft
  • Falling objects
  • Accidental overflow of water from household appliances or plumbing, heating, air conditioning, or fire sprinkler systems
  • Freezing of household appliances or plumbing, heating, air conditioning, or fire sprinkler systems
  • Accidental cracking, burning, tearing, or bulging of plumbing, heating, air conditioning, or fire sprinkler systems
  • Accidental damage due to short-circuiting of electrical current (excluding loss of necessary electrical parts)

This list of specific perils provides a significant amount of property coverage. It also excludes perils like water damage caused by melted snow, earth movement, and nuclear hazards. If these perils aren’t likely to happen in your neighborhood, a named perils policy will be great for you. But if you’re looking for additional coverage, you may be better off with a special form or all-risk policy.

Named Perils vs. All-Risk Policies

Named perils coverage protects your home and belongings from those 16 named perils, nothing more, nothing less. For policyholders seeking more than basic or broad form coverage, you can always add policies to your home insurance for damages like sewer backups, or you can add on a flood insurance policy, for example. You can even increase your coverage amount for perils that are already covered by your named perils policy, like sleet or wind damage

But if you find yourself wanting more coverage for all of your named perils and then some, it may be easier and more cost-effective to ask your insurance agent about an all-risk home insurance policy

All-risk policies are essentially the opposite of named perils policies. Where named perils policies cover only the listed causes of damage, all-risk policies cover any peril except those specifically excluded. This means that if you need to file an insurance claim, your home insurance policy will cover the repair or replacement cost for the majority of perils (after you reach your deductible, of course). 

Special form policies (or HO-3 policies) and comprehensive home insurance policies (HO-5 policies) are both open form (or all-risk) policies. The main difference between HO-3 and HO-5 home insurance coverage is this: HO-3 policies usually offer actual cash value for replacing or repairing your belongings, and HO-5 policies cover the entire cost of replacing your lost or damaged items. This means that HO-3 policies offer less compensation for older items and HO-5 policies provide the same replacement cost for your lost items regardless of their prior age or condition. 

All-risk policies come with higher protection but at higher annual premiums. Before you jump headfirst into an all-risk policy, compare prices and policies using Insurify’s comparison tools. You can also talk to an insurance professional to weigh your options. If you’re feeling unsatisfied with your named perils policy, maybe adding a flood insurance policy or another simple add-on will keep you protected and help you save. It all just depends on the perils in your area and the amount of coverage you prefer.

Figuring out what type of home insurance policy is best for you can get pretty confusing pretty quickly. Insurify compiled some of homeowners’ most frequently asked questions about named perils policies so you can easily decide what type of policy is best for you.

Frequently Asked Questions - Named Perils

What isn’t included in my named perils home insurance policy?

The easiest part of named perils policies is that they only cover the specific events that they say they do. If your policy says it will pay for damages caused by wind, fire, and the weight of snow, then that’s what it covers, and anything that isn’t included in your named perils policy is not covered. If you’re concerned about your coverage, you can always add additional policies to your home insurance or ask your insurer about increasing your coverage amounts.

Do the 16 named perils change depending on where you live?

Sometimes. Insurance companies in most U.S. states offer coverage for the same 16 named perils, but some states have exclusions. The best way to know which perils are covered in your state is to check your home insurance policy or to ask a local insurance agent what named perils are included in broad-form policies.

Should I purchase a named perils policy for my commercial property insurance?

The named perils for business insurance policies are a bit different from those for home insurance policies. Because of this, you’ll want to look over what perils are included in a named perils commercial property insurance policy and consider the cost of any riders you may need to add for increased coverage. If the cost of your named perils policy plus all of your rider costs exceeds that of an all-risk policy, it will be better for you to insure your business with an open perils policy.

Is an open perils policy better than a named perils policy?

Different home insurance policies aren’t always better or worse than other options; the policy you choose simply depends on your needs. If you live in an area that regularly experiences flooding or landslides and are concerned about the cost of repairing any potential damages, an open perils policy will help you rest easy knowing you’re covered. But if you live in a safe neighborhood that experiences few thefts or natural disasters, an open perils policy may end up costing more than it’s worth. The best policy for you will offer coverage for any peril you may face and doesn’t break the bank.

Conclusion 

Understanding the different types of policies is the first step to making sure your home insurance policy has you covered. Whether you decide to go with a named perils policy or an all-risk policy simply depends on whether the 16 named perils are enough to protect your home. The second step in knowing you’re covered is to compare policies using Insurify’s comparison tools. That way, you can rest assured knowing that you have the best homeowners policy for the best price.

Insurify can help you find the best home insurance at the most affordable price. Check out our list of best home insurance companies and get started today. You could see significant savings!

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Yep, it’s that easy. 

Updated October 19, 2020

Jackie Cohen received her B.A. in Global Media and Public Relations from the University of Massachusetts, Amherst. Currently based in Boston, MA, she works as a content writer for Insurify. An avid globe-trotter and foodie, Jackie spends her spare time adventuring far and near.