What Are Perils in Insurance?

Perils are events that can impact your home and other property. Here’s what you need to know.

Jerry Brown
Written byJerry Brown
Jerry Brown
Jerry Brown
  • 4+ years of experience writing about personal finance

  • MBA from the University of Chicago

Jerry’s personal finance interest stemmed from his journey toward freedom from debt. He’s since covered insurance, debt management, and personal loans for major publications.

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Chris Schafer
Edited byChris Schafer
Chris Schafer
Chris SchaferSenior Editor
  • 15+ years in content creation

  • 7+ years in business and financial services content

Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.

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Updated December 15, 2022 at 11:00 AM PST | Reading time: 4 minutes

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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

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.[1] This type of insurance protects your belongings against 16 covered events, including fires, windstorms, and volcanic eruptions.

Open peril

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:[2]

  • Fire and lightning

  • Windstorm and hail

  • Weight of ice or snow

  • Riot or civil commotion

  • Aircraft

  • Vehicles

  • Volcanic eruption

  • Falling object

  • 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.

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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).[3]

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:

  • Sinkholes

  • Some types of water damage

  • Wear and tear

  • Intentional damage

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.

Policy TypeDwelling CoverageContents Coverage
H0-1: Basic formNamed perilN/A
H0-2: Broad formNamed perilNamed peril
H0-3: Special formOpen perilNamed peril
H0-4: Contents formN/ANamed peril
H0-5: Comprehensive formOpen perilOpen peril
H0-6: Unit owners formNamed peril (limited coverage)Named peril
H0-7: Mobile home formOpen perilNamed peril
H0-8: Modified formNamed perilNamed peril

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.

Home insurance perils FAQs

Here are answers to some commonly asked questions about home insurance perils.

  • What is the difference between an uninsured peril and an excluded peril?

    Neither an uninsured peril nor an excluded peril will be covered by your insurance policy. But an excluded peril will be listed as an exclusion in your policy.

  • Will home insurance cover damage to the belongings inside your insured property?

    If your belongings are damaged as a result of a covered event, you can file a claim with your home insurance provider to repair or replace them — up to your policy’s limits. You can also file a claim if your belongings are stolen.

  • What determines if a peril is a named or open peril?

    The type of home insurance policy you purchase determines whether you have open-peril coverage or named-peril coverage. A named-peril policy only covers events specifically named in your policy, while an open-peril policy covers all events unless your policy excludes them.[4]

    For example, an HO-3 policy usually covers damage to your dwelling on an open-peril basis and your belongings on a named-peril basis. By contrast, an HO-5 policy covers your belongings and your dwelling on an open-peril basis.

  • How do perils work in other types of insurance?

    Perils work similarly in other types of insurance, with your insurer protecting you against certain events. For example, comprehensive auto insurance protects your car against certain perils, like fire, theft, and vandalism. If one of those occurs, you can file a claim with your insurer to get help covering the cost of repairing or replacing your vehicle.

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Sources

  1. National Association of Insurance Commissioners. "A Shopping Tool for Homeowners Insurance." Accessed December 15, 2022
  2. Insurance Information Institute. "Homeowners Insurance Basics." Accessed December 15, 2022
  3. FloodSmart.gov. "National Flood Insurance Program." Accessed December 15, 2022
  4. National Association of Insurance Commissioners. "Homeowners Insurance." Accessed December 15, 2022
Jerry Brown
Jerry Brown

Jerry has been writing about personal finance for over four years. He started writing about personal finance in 2017 to document his journey to get rid of thousands of dollars in credit card debt. Two years ago, he pivoted away from writing for his own blog to focus on writing for major publishers like Bankrate, Forbes Advisor and Credible. He covers a variety of topics, including insurance, debt management and personal loans.

Chris Schafer
Edited byChris SchaferSenior Editor
Chris Schafer
Chris SchaferSenior Editor
  • 15+ years in content creation

  • 7+ years in business and financial services content

Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.

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