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Open Perils Policy: What Is Covered?

Open peril coverage is a type of property insurance that protects you from the widest range of potential problems - including ones you might never anticipate. If you want home insurance coverage that helps you be prepared for the unexpected, you want an open peril policy.

Not all home insurance policies have open peril coverage. Many policies have a narrower form of coverage known as named peril insurance.

This article will explain the difference between open peril and named peril insurance so you can decide which type of policy is right for your needs.

Named Perils vs. Open Perils

Named peril coverage and open peril coverage are different types of policies in homeowners insurance. A named peril policy lists which perils are covered while an open perils policy covers all perils unless specifically excluded in the policy. You can't always anticipate what will damage your home. Open peril coverage gives you more protection against the unexpected than named peril coverage. However, there is always an exclusions list so you're not covered for everything.

What is a peril?

In insurance terms, a peril is an event that can cause damage to your property. This can be a fire, storm, theft or vandalism, etc.

The cause of the damage determines whether or not you're covered. This is why it's important to know which types of perils are covered by your insurance policy.

The difference between named peril and open peril coverage

A named peril policy is one that includes a specific list of perils that are covered. If something isn't on that list, it isn't covered.

An open peril policy takes the opposite approach. It assumes everything is covered unless it is specifically listed as an exclusion. Because of that, open peril coverage provides a broader range of protection.

Some very damaging risks may not be included on the list of named perils covered by a basic insurance policy or even an open peril policy.  You may be covered for fire damage with a named peril policy but won't be covered if a tree falls on your roof. You would be covered for both with an open peril policy.

Infestations are usually not included in a named-peril homeowners insurance policy and are excluded in an open peril policy. However, you may be able to buy a separate endorsement to protect against bed bugs or mold damage. Earthquake and floods are never included in a named-peril policy and hardly ever in an open peril policy and must be bought separately as well.

Property coverage for home vs. possessions

Homeowner's insurance policies may cover both the home itself and the personal property in it, but there may be a difference between how a policy covers the building itself and the possessions inside.

Some homeowner's policies are open peril policies when it comes to the home, but cover personal property if the loss is caused by a named peril.

So, pay attention to the type of coverage that applies to your home and to your possessions. If you want maximum protection, get a more comprehensive insurance policy that applies open peril coverage to both the dwelling and your possessions.

If your open peril policy has a list of exclusions, it means you’re covered for every type of damage except those caused by things on the list.

Homeowner's Policies and Type of Coverage

Homeowners policies are commonly referred to with the abbreviation HO followed by a number. That number indicates the type of coverage the policy provides.

The table below shows some common types of homeowner policies and how their coverage applies to your home and your personal property:

Policy

Description

Dwelling

Personal Property

HO-1

Most limited coverage

Covers 10 named perils

Not covered

HO-2

More coverage than HO-1, less than HO-3

Covers all 16 named perils

Covers all 16 named perils

HO-3

Basic policy used by most homeowners

Open peril

Covers all 16 named perils

HO-5

Highest coverage level

Open peril

Open peril

HO-8

Limited coverage for older and historic homes.

Covers 10 named perils

Covers 10 named perils

Note that the table above shows the general characteristics of each policy's type of coverage. However, open peril policies may still exclude some key perils so be sure to read the details of any policy you're considering.

Protect Your Home and Your Personal Belongings

What Does Open Perils Exclude?

It may sound like an open peril policy would cover you for anything could go wrong, but as always with insurance it's important to read the language in the policy.

Not all home insurance policies have open peril coverage.

Examples of things an open peril policy might exclude are:

  • Floods

  • Earthquakes

  • Insect infestation

  • Mold and fungus

  • Mechanical breakdowns

  • Power outages or surges

  • Rust and corrosion

  • Normal wear and tear

  • War

If your open peril policy has a list of exclusions, it means you're covered for every type of damage except those caused by things on the list.

Should You Get an Open Perils Policy?

Here are some things to consider when choosing whether to get an open perils policy:

  • How thoroughly protected do you want to be? If you want to be sure you're covered no matter what happens, you may prefer an open peril policy along with flood and earthquake endorsements too.

  • What perils are you exposed to? Some locations are exposed to more perils than others. The broader coverage of an open peril policy might be especially appealing to homeowners who anticipate multiple types of perils, but it may be more expensive.

  • What is the cost difference between open and named peril policies? An open peril policy is almost certain to cost more than named peril coverage, particularly in riskier situations. You have to decide whether the added cost is worth it.

  • What's the value of your personal property? As noted earlier, coverage for your possessions might be different from coverage of the home itself. One factor in whether you should pay for open peril coverage of your possessions is how much those possessions are worth. If all you have is a bunch of old furniture and a second-hand TV set, it may not be worth paying for the extra coverage. If you have high-value items like expensive jewelry, high-tech equipment, art work, collectibles, etc., you may want to give them a higher level of protection.

The difficult part is deciding whether the broader coverage of an open perils policy is worth the extra cost.

Open Peril Coverage FAQs

How do I know if my homeowners insurance covers open perils?

Read your insurance policy and see how it describes coverage. If it lists specifically which causes of damage are covered, it's a named peril policy and anything not on the list isn't covered. If it describes coverage as applying to all perils, it's an open peril policy - but it still might have a list of exclusions. If you're still not sure, call your agent.

Do I need an open peril policy?

Choosing insurance coverage comes down to a cost/benefit decision. More coverage is going to cost more - it's just a question of how much more. The benefit depends on the value of your home and possessions as well as on the severity of the risks you face.

How much more does open peril coverage cost?

This depends very much on the specifics of your situation. That's why you should get insurance quotes before deciding whether the extra coverage is worth it. You should also get quotes from multiple insurance companies because some will provide that extra coverage more cost-effectively than others.

Get the Best Price on Open Peril or Named Peril Coverage

Open peril insurance gives you broader coverage. Rather than naming which perils it covers, an open peril insurance policy will cover you for just about any event that damages your property, unless that type of event is specifically excluded from the policy.

Naturally, any homeowner would want the broadest coverage possible. The difficult part is deciding whether the broader coverage of an open perils policy is worth the extra cost. The only way to know that is to compare quotes for both open perils and named perils policies.

In either case, you should shop around to get the cheapest rates available. Just enter your zip code below and provide some basic information to start getting free homeowners insurance quotes.

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