Understanding named peril coverage

When reviewing your insurance policy, you've likely encountered the term named perils. But what exactly does it mean? What is a peril in the context of home insurance?

Named perils refer to the specific events listed in your insurance policy and covered by it. If you have this type of policy, it will only provide coverage if the damage to your property was caused by one of those perils named in the contract.

Some policies cover multiple named perils — such as fire, theft, windstorms, hail or vandalism. Others only cover specific perils like earthquakes or floods. If the cause of loss isn't one of the named perils, your insurance likely won't pay out.

Understanding how named perils work can help you choose the right level of home insurance.

Key takeaways

• Named perils are specific events that can cause damage to your home or belongings that your insurance will cover.

• Common named perils include fire, lightning, windstorms, hail, explosions, theft, vandalism, and falling objects.

• If you have a named perils policy and file a claim for damage that’s not listed as a covered event, it generally won’t be covered by insurance.

• HO-3 policies, the most common form of home insurance, have named perils coverage for your belongings and open perils coverage for your home’s structure.

What are named perils in insurance?

A "named peril" is an insurance term that refers to a specific risk or cause of loss that is explicitly listed and covered under an insurance policy.

In a named peril home insurance policy, named perils are the specific events or disasters for which the policy will provide coverage if they cause damage to your home or personal belongings.

If the damage to your property was not caused by one of those named perils outlined in the contract, the insurance likely won't provide coverage for that loss.

How does named peril coverage work?

Named perils coverage typically works like this:

• Your homeowners policy will list the perils it covers, such as in a section called ‘Perils Insured Against’ or something similar that lists all the events it covers.

• Suppose damage occurs to your home or belongings from a peril listed in this section of the policy. In that case, it should be covered, and the insurance company will pay for repairs or replacements up to the policy limits.

• However, if the cause of damage is not one of the explicitly named perils listed, the policy will not provide coverage for those losses.

For example, say your policy names fire, wind, hail, and theft as covered perils. If your home suffers damage from a fire or windstorm, you'll likely be covered. But you would not have coverage if damage happens from a flood or earthquake because they are not listed as perils. But of course, all coverage determinations are based upon the terms and conditions of the policy at the time of any loss.

The benefit of a named peril policy is the premiums are generally lower than an “all-risks” policy, which covers everything except what’s specifically listed as an exclusion.

The downside is you only have coverage for the listed events. So, it's important to understand exactly which perils are named and covered in your policy documents.

What are some common named perils covered in named peril home insurance?

Standard home and renters insurance policies provide coverage for certain named perils for your personal belongings, such as furniture, appliances, clothes, and electronics. On the other hand, the dwelling itself (the physical home structure) is usually covered on an "open perils" basis in an HO-3 policy, meaning it's insured against all risks except those specifically excluded, like floods and earthquakes.

In other words, the policy will only cover damage to your personal property if the cause of damage is specifically listed in your policy documents.

Typically, there are 16 named perils that are covered, which include:

• Fire or lightning

• Windstorm or hail

• Explosion

• Riot or civil commotion

• Aircraft

• Vehicles

• Smoke

• Vandalism

• Theft

• Volcanic eruption

• Falling objects

• Weight of ice, snow or sleet

• Freezing

• Accidental discharge or overflow of water or steam

• Sudden and accidental tearing apart, cracking, burning or bulging

• Sudden and accidental damage due to short circuit

So if your TV gets stolen or your couch is damaged in a fire, you'd likely be covered since theft and fire are two of the named perils.

Or, if a vehicle crashes through your living room in the middle of the night and vehicles are listed as a covered incident in your policy, your insurance will likely cover the cost to replace your personal property.

However, if your belongings are damaged due to a non-named peril, such as flood, you will not be covered because floods are typically not one of the named perils. Indeed, flood is often excluded from coverage in most homeowners policies.

So, the named perils mainly limit coverage for your personal belongings rather than the home structure itself. However, there are homeowners policies that have named peril coverage for your dwelling as well as your personal belongings, so it is important to review your policy so that you know what is and is not covered.

Named perils vs all-risk (open) perils

There are two main types of coverage you’ll come across in homeowners insurance: named perils and all-risk (open perils).

Named perils coverage:

• Only covers specific events listed in your policy documents.

• Usually applies to the personal property part of your HO-3 insurance policy.

• Offers more limited protection.

All-risk or open-perils coverage:

• Covers you against all causes of loss except those specifically excluded in the policy.

• Instead of listing what’s covered, it lists insurance exclusions like flood, earthquake, war, and nuclear hazard.

• Usually, it applies to the dwelling or physical structure part of your insurance policy.

• Offers broader protection.

The key difference is that broad named perils only protect against a defined list of events, while open perils protect against everything except certain exclusions specified by the insurer.

Open perils are generally the more robust coverage as they cover all risks of direct physical loss unless the peril is specifically omitted. This is why insurers may charge more for an open perils policy.

However, open perils coverage does not mean you’re covered against every single loss. There are still standard exclusions like flood, earthquake, neglect and wear and tear that you typically need separate insurance policies for.

Still have questions?

Find out more on the topic of named perils with the help of the following commonly asked questions.

What are the three categories of perils?

The three main categories of perils in home insurance policies are:

• Named perils. These are specific causes of loss like fire, theft, or wind that are explicitly listed as covered events.

• Open perils/all-risk. Provides coverage for all causes of loss except those intentionally excluded in the policy.

• Excluded perils. Events that are never covered by the policy, such as floods, earthquakes, and wear and tear.

What are comprehensive perils?

Comprehensive perils typically refer to an "all-risk" or open peril policy in insurance. This type of policy covers all causes of loss or damage except those specifically excluded. So, rather than listing what's covered, it lists exclusions like floods, earthquakes, and neglect. A comprehensive or open peril policy provides broader protection than a named peril policy but may also come with higher premiums.

What does special perils insurance cover?

Special perils insurance is the same as all-risk insurance. It’s where everything is covered except what’s listed as an exclusion. It’s also known as “special form coverage,” which is why you may see the terms used interchangeably.

What does named perils insurance not cover?

It depends on the type of home insurance you have and your specific policy. For example, if you have a basic HO-1 policy, it won’t cover damage from falling objects, the weight of ice, snow or sleet, among other things. If you have an HO-3 named perils policy for your personal property, common exclusions are floods, earthquakes, and damage caused by lack of maintenance or wear and tear.