What is a peril? [A homeowner’s guide]

Homeowners insurance coverage is designed to protect you and one of your biggest assets — your home — against any number of potential disasters that could befall the property. These disasters are also referred to as perils or causes of loss and may or may not be covered depending on your homeowners insurance policy terms.

Read on to discover what is a peril in insurance, how open and named peril policies differ, and some examples of perils you might see when buying home insurance coverage.

Key takeaways

• A peril (insurance definition) is any event that could result in a loss for your property.

• There are two standard types of homeowners insurance coverage available: named peril insurance and open peril insurance.

• Open peril insurance protects against any and all perils except those explicitly named as exclusions in the policy. Named peril insurance protects against any perils listed in the policy but excludes any causes of loss not named and mentioned.

• If your property experienced a covered loss, you’ll be responsible for paying your policy’s all peril deductible.

• Understanding what perils are and which ones are covered by your specific policy can help ensure your property is always protected.

The types of perils found in homeowners insurance

Depending on the type of homeowners insurance policy you buy, your property will be protected against either named or open perils. A named peril policy provides you with more limited coverage compared to an open peril policy, though your homeowners insurance may include a combination of both coverage types for your dwelling and personal property.

Named perils

Named perils coverage only protects against the perils or causes of loss specifically mentioned in the policy documents. If the peril isn’t named in the policy, any damages resulting from that peril are usually excluded.

HO-1 and HO-2 homeowners insurance policies include named peril coverage for dwellings and personal property, while HO-3 policies — the most popular — offer named peril coverage on personal property while also providing open peril coverage for your dwelling.

Open perils

Open peril policies are the opposite of named peril coverage. With open perils, your property is protected against any losses, no matter how they occur, as long as the peril isn’t explicitly mentioned in the policy as an exclusion. This offers more comprehensive coverage and protects your property from any number of hazards that may occur.

If you want protection against the excluded perils in an open peril policy, you’ll need to purchase separate coverage. This can usually be done through your insurance company in the form of a rider or as a separate policy through another provider.

What is the difference between a peril and a hazard?

Though the two terms are often used interchangeably, there is a difference between a peril and a hazard in homeowners insurance.

A peril is an event that could occur and result in a loss. This might include a house fire, flood, lightning, or even a hurricane.

A hazard, on the other hand, is a factor or condition that can increase the chance of a certain peril occurring. For example, not cleaning your chimney very often could result in a chimney fire, or failing to wrap and insulate your pipes before winter might lead to them freezing and bursting.

Do endorsements in insurance have deductibles?

Yes, your homeowners insurance policy endorsements are subject to a deductible. However, depending on the endorsement(s) you add to your policy, you may find that different deductibles apply to certain damages, separate from the general deductible on your standard policy.

Your insurance deductible is the initial portion of a filed claim that you are responsible for paying out of your own pocket before your carrier steps in to cover the rest. Your general homeowners insurance policy deductible may be a flat dollar amount—often ranging from $500 to $5,000—or a percentage of your home’s insured value (such as 1% or 2%). However, when you add an insurance endorsement to your policy, it often comes with its own specific deductible.

For example, if your home is insured for $650,000 and you have a 1% deductible, you’re responsible for paying the first $6,500 of any claim made against the policy. Your scheduled personal property coverage may have a smaller, flat rate deductible of only $500. If there is a covered loss to a valuable piece of jewelry, for instance, the endorsement’s deductible would apply and you would only be responsible for this lower deductible, not the full $6,500.

On the other hand, your policy could also have a higher deductible for certain catastrophes. Earthquake insurance deductibles, for instance, often range from 2% to as high as 20%. If you’re in an earthquake-prone location, you could wind up with a much higher deductible for claims related to earthquake damages.

Commonly covered perils in homeowners insurance

Whether you purchase a named or open peril policy, there are a few standard perils that are typically covered by homeowners insurance.

Of course, with open peril coverage, you’ll be protected against any perils not explicitly named as exclusions. With named perils coverage on standard homeowners insurance policies, you’ll often be protected against things like:

• Fire

• Lightning

• Hail

• Wind

• Smoke

• Explosion

• Vandalism or malicious mischief

• Theft or burglary

• Riots or civil commotion

• Ice, snow, or sleet

• Damage caused by vehicles or aircraft

• Volcanic eruptions

• Sudden flooding due to a plumbing, HVAC, or appliance malfunction

• Damage due to sudden electrical currents (power surges)

Which perils are not commonly covered?

Named peril coverage only protects against the perils specifically named in the policy documents. If it’s not a peril listed in the policy, it isn’t covered.

Even with open peril homeowners insurance coverage, some common perils are often excluded from policies, regardless of the carrier or factors like your location.

For example, floods and earthquakes are often listed as excluded perils. If you want coverage for these perils, you’ll need to look into buying flood insurance or earthquake insurance coverage at an additional cost.

Depending on where you’re located, other catastrophic perils such as hurricanes, tornadoes, and wildfires may also be excluded. If you live in an area prone to these types of disasters, your insurance carrier may exclude them from standard homeowners insurance coverage. In this case, you’ll need to purchase a separate policy or rider if you want to be covered for these perils.

Additionally, your typical homeowners insurance policy will not protect against things like mold, sewer backups, slow plumbing leaks, or damage due to pests. And while it should probably go without saying, any normal wear and tear in or around your home is excluded from homeowners insurance protection.

Still have questions?

Here are some of the most frequently asked questions regarding homeowners insurance perils to help you learn more.

Is fire a hazard or peril?

In terms of homeowners insurance coverage, fire is considered a peril as it is the cause of a potential loss. If there are factors that contribute to the likelihood of that fire — such as electrical wiring that isn’t up to code, an unattended fire pit on the property, or a chimney that hasn’t been cleaned out in many years — those would be considered hazards.

Do I need all perils?

Deciding whether you need all perils coverage for your home depends on your location and personal factors, like your budget. All perils coverage, also known as open peril, offers you the most comprehensive protection for your property, ensuring that you are covered no matter what sort of perils befall your home (minus any excluded perils, of course). This coverage is more costly than a named peril policy but gives you expanded protection against any number of potential losses.

What is a restricted peril?

No matter how broad your homeowners insurance coverage is, some perils will be excluded. Restricted perils vary from one policy to the next but often include things like floods, mold, sewer backups, arson, damage due to pests, and normal wear and tear of the home.

What are the 16 named perils?

Named peril coverage protects against any perils explicitly named in the policy. There are 16 peril examples that are typically included in this coverage, such as fire or lightning, smoke, volcanic eruption, windstorms or hail, explosions, riots, damage caused by vehicles, damage caused by aircraft, falling objects, vandalism, theft, damage due to the weight of ice or snow, accidental flooding due to damaged pipes or appliances, damage due to frozen pipes or household systems, damage due to electrical currents or power surges, accidental tearing apart or cracking.

Is war a covered peril?

Riot and civil unrest are typically covered perils in both named and open peril policies. However, damages and destruction due to acts of war are often excluded in homeowners insurance policies through a war exclusion clause.