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Open Peril Policy

Home insurance comes in many shapes and sizes. There are various different policy types and ISO forms that homeowners can choose from. When it comes to the number of perils that the home insurance policy covers, however, there are fewer choices. Home insurance policies come in two different types; open peril policies and named peril policies. Of the two types of policies, here we take an in-depth look at the open perils policy type.

What is a peril?

Before we get into what a policy does and doesn't cover, it's important to understand insured perils. A peril is an event or disaster that causes damage to a home or property. Common perils are fire, tornado, and theft.

What is open perils coverage?

Now that we understand perils, we can answer the question of what is an open peril insurance policy. Open perils coverage will insure a home and property against damage or lose caused to the home. An open peril policy does not list the perils that are covered in the policy. Instead, an open peril policy covers all perils.

Before you get too excited about the policy, there is more you need to know. All open peril policies come with an exclusion list. The exclusion list is a list of perils that the insurance policy will not insure. This list varies from company-to-company, but the most common exclusions are:

  • Earth Movement (earthquake coverage can be endorsed on)
  • Ordinance or Law (some coverage may be provided in your policy)
  • Water Damage (some coverage can be endorsed onto the policy)
  • Power Failure
  • Neglect
  • War
  • Nuclear Hazard
  • Intentional Loss
  • Government Action
  • Collapse (some coverage may be provided in your policy)
  • Theft to a Dwelling Under Construction
  • Vandalism or Malicious Mischief
  • Mold, Fungus, or Wet Rot (some coverage may be provided in your policy)
  • Wear & Tear, Deterioration
  • Mechanical Breakdown
  • Smog, Rust & Corrosion
  • Smoke from Agricultural Smudging & Industrial Operations
  • Discharge, Dispersal, Seepage of Pollutants
  • Settling, Shrinking, Bulging, or Expanding
  • Birds, Vermin, Rodents, Insects
  • Animals Owned by Insured

The fact that the exclusion list above looks long may make you wonder if the open perils form is really better than the named perils form. What you have to remember is that in an open peril policy, the perils listed above (assuming your policy was a standard ISO policy) are the only perils your company won't insure. If you don't see a peril listed in the exclusion list, then it is covered under your insurance policy. If it is listed, then you probably won't be insured for the claim.

What open perils forms are there?

As mentioned above, open perils coverage is far superior to named perils coverage. There are fewer insurance policies that offer it. The two most common standardized insurance policies that offer open peril coverage are the HO3 and the HO5.

HO3.    The HO3 home insurance policy insures all buildings on the property for open perils. The HO3 policy, however, does not cover personal property for open perils, but instead relies on named perils to insure belongings.

HO5.    The HO5 home insurance policy insures all buildings on the property for open perils. In addition, the HO5 also insures personal property for open perils, although there are typically a few extra exclusions included.

Although there are other policies that insure the home for open perils (HOB HOC), the HO3 and the HO5 are the most common open peril policies.

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Last modified: Mon Jan 27 10:57:04 MST 2014