Homeowners insurance perils: what's covered, what's not, and FAQs (2024)

Affiliate links for the products on this page are from partners that compensate us (see our advertiser disclosure with our list of partners for more details). However, our opinions are our own. See how we rate insurance products to write unbiased product reviews.

• Homeowners insurance covers perils like fire, theft, or a storm.
• Your home policy may cover named or all perils (unless perils are excluded in your policy documents).
• Homeowners insurance agents can help you get comprehensive coverage and fill in gaps.
• No matter what type of homeowners insurance you have, you'll need to buy add-on policies for things like earthquakes and flood.

The average homeowner expects homeowners insurance to do one thing: protect their home. The concept seems simple, but anybody who's been through a major claim can tell you it's anything but. Unfortunately, insurance doesn't offer blanket coverage for everything and anything that could happen to you. It breaks down potential risks and sets premiums to step in should your home be affected by said perils, further adjusting prices based on how much protection you want.

There are eight types of homeowners insurance, but they all fall into one of two categories: named peril or open peril.

What is an insurance peril?

Perils should not be confused with coverages. Both affect your annual premiums. But simply put, perils determine if your homeowners insurance company will pay for damages. Coverages determine what the company will pay for (i.e., rebuilding your home, replacing personal belongings, paying for your hotel if you're displaced, etc.).

Most home policies cover perils like fire, theft, or vehicles. But don't assume "fire" means all fires. Insurance companies break it down further, excluding things like lava (and associated fires) and forest fires in wildfire-prone areas. Unsurprisingly, insurance policies come as large packets listing all coverages and/or exclusions.

Named peril vs. open peril home insurance

Homeowners insurance falls in two categories: named and open peril policies.

A named peril policy covers you for listed events, like a fire, storm, or theft. "Open peril" is also referred to as "all peril." An open/all peril policy covers any perils that are not explicitly excluded in your policy documents. This policy comes with higher premiums, but don't confuse it with open-ended coverage. Insurance companies have decades of experience paying claims. So many have excluded the most costly perils that may seem obscure to the average consumer. The best way to ensure you don't fall victim to coverage gaps is by working with an experienced professional to get your homeowners quotes.

Insurance company Lemonadeprovides the following example of an open peril policy: If an apartment flood ruined your computer, and your policy doesn't specifically say flooding isn't covered, your insurance company will have to approve your claim, by default. Of course, this kind of oversight is unlikely to happen, which is why a licensed insurance agent might recommend water backup coverage and flood insurance if you're in certain flood zones.

Here are a few instances of events that might be considered named peril or open peril:

*Open peril coverage includes named perils and is more expansive covering anything not specifically excluded in the policy. HO-5 is open peril. HO-3 and HO-7 policies open peril applies to dwelling coverage only.

Perils not covered by homeowners insurance

Earthquakes, floods, government seizures, mudslides, ordinance updates, sewer backup, and sinkholes are all perils commonly excluded from homeowners insurance. Those will require a policy rider to extend coverage.

Homes located in disaster-prone areas (hurricanes, tornadoes, and wildfires) may need additional specialty insurance policies. For example, in areas like Florida, Louisiana, or Hawai'i, mortgage companies may require hurricane insurance as part of your homeowners coverage or a separate policy. If you're unsure, your insurance agent can review your specific homeowners insurance policy.

Peril coverage depends on your type of homeowners insurance

Your homeowners insurance agent might quote one of eight policies depending on your home type. For example, HO-6 polices cover condos in a "walls-in" fashion. It does not cover the building, only your internal fixtures, personal belongings, etc. As such, policies are generally much cheaper than a single-family residence policy.

However, you can choose between open and named peril coverage, particularly when shopping for a detached single-family structure. Something to note is the tradeoff. If you want more comprehensive coverage with open perils protection for the unexpected, you'll pay more. If you're comfortable with named perils coverage, you'll pay less. However, you might find yourself in a pinch if you fall victim to an unusual circ*mstance.

What is homeowners insurance?

Homeowners insurance protects your home from unexpected disasters. Dwelling coverage is a standard part of every policy. Your insurance agent will run a replacement cost estimate to determine how much coverage you need. Depending on your budget, you can also buy coverage for your belongings, personal liability, hotel and other costs if your home becomes unlivable, and more.

If the mailman slips and falls on your sidewalk, the dog bites a guest, a tree falls on your roof, or the neighbor's kid injures himself doing a cannonball in your swimming pool, homeowners insurance can protect you. If you live in a condo/co-op, the condo association's master policy covers the building and common areas, but condo insurance covers your unit.

Homeowners insurance offers protection for homeowners' belongings and the home itself. Unlike car insurance, homeowners insurance is not required by state law. However, if you have a mortgage, your lender will require homeowners insurance to protect the investment. Also, some condo associations require a certain amount of condo coverage.

What does homeowners insurance not cover?

The exact perils covered by insurance vary between companies and policies. However, there are three things homeowners insurance does not cover regardless of your policy: neglect, maintenance, and intentional destruction. Insurance companies expect you to take steps to prevent damage and keep your home up to code. So if, for example, your floor collapses and the company finds mold, it may deny your claim as that would be a sign of an unaddressed leak (neglect).

Likewise, home insurance does cover vandalism and other destruction when it's caused by an outside party. However, it will not cover intentional damage caused by the policyholder or other similar parties.

How to choose your homeowners insurance

If you are unclear about your insurance peril coverage, review your homeowners insurance policy and contact your property and casualty insurance agent. It is recommended that you review your policy coverage yearly. If your homeowners insurance company hasn't provided the level of service you expected, it could be time for you to select a new provider.