Not all perils are created equal, or at least covered equally by your homeowners policy. If your home is damaged by fire or lightning, your policy probably covers that.
But if your home sustains damage from a flood or earthquake, you might not be so lucky.
All these events constitute perils. It’s important to know what a peril really is, how it affects your homeowners policy, and some ways you can enhance the long-term protection of your property.
What qualifies as a peril?
A peril is an event or circumstance that leads to damage to your property or personal belongings. Some common examples of perils include a windstorm, theft, and vandalism.
Standard home insurance policies typically cover and exclude certain perils based on whether the policy provides named-peril coverage or open-peril coverage.
Named-peril home insurance policies outline which perils your policy covers. A standard home insurance policy usually provides named-peril coverage for your personal belongings. This type of insurance protects your belongings against 16 covered events, including fires, windstorms, and volcanic eruptions.
An open-peril policy, also known as an all-peril or all-risk policy, covers all perils, except those listed in the policy as exclusions. This means an open-peril policy provides coverage for your home’s structure but may exclude coverage for events like earthquakes and floods.
Perils usually covered by homeowners insurance
A standard home insurance policy, also known as an HO-3 policy, protects your home against many perils. For instance, if someone breaks into your home and steals all your furniture, your insurer will help you pay to replace your belongings — up to your policy’s limits.
Home insurance also usually covers damages to your home caused by events like smoke, explosions, and vandalism.
In addition to the perils mentioned above, the following events are commonly covered by a homeowners policy, according to the Insurance Information Institute:
Fire and lightning
Windstorm and hail
Weight of ice or snow
Riot or civil commotion
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)
While the above list outlines what standard home insurance normally covers, some variations exist. This means you’ll need to review your existing policy to determine your exact coverage. And if you have any questions, always contact your insurer.
Perils usually not covered by homeowners insurance
Although an HO-3 policy protects your home against many perils, it won’t cover everything. For example, most policies don’t offer flood protection. To protect your property against flood damage, you’ll need to purchase a separate flood insurance policy from a private insurance company or the National Flood Insurance Program (NFIP).
Home insurance also rarely covers earthquakes. If you want to protect your property against this type of damage, you’ll have to add an earthquake endorsement to your existing policy or purchase a separate earthquake policy.
Standard homeowners insurance also typically excludes:
Home insurance perils by chosen policy
Whether a home insurance policy provides named-peril coverage or open-peril coverage depends on the type of policy you choose.
You can choose from eight types of home insurance, and some are better suited than others for your living situation. For example, if you live in a condo, you need to purchase HO-6 insurance.
|H0-1: Basic form
|H0-2: Broad form
|H0-3: Special form
|H0-4: Contents form
|H0-5: Comprehensive form
|H0-6: Unit owners form
|Named peril (limited coverage)
|H0-7: Mobile home form
|H0-8: Modified form
Differences between perils, hazards, and risks
You’ve read a lot about home insurance perils, but you may have noticed policies that include words like “hazard” or “risk.” What’s the difference?
Perils, hazards, and risks all relate to the chances of an event causing a loss occurring, but they mean different things. A peril is an event that causes damage, while a hazard is a condition that increases the chances of a loss occurring.
For example, say water damages your home because you’ve failed to maintain your roof. In that situation, the water damage is a peril, while the poorly maintained roof is a hazard. Here’s a bit more information on perils, hazards, and risks.
Perils are events or circumstances that cause damage to your property or personal belongings.
Hazards are conditions that increase the likelihood of damages occurring.
Risk in insurance refers to the possibility of damage from an event.