What Is Covered Peril in Homeowner's Insurance?
Definition & Examples of Covered Peril in Homeowner's Insurance
Covered peril in homeowner's insurance refers to the types of damage for which your insurance company will pay. Perils are hazards and events that can cause loss or damage.
Learn more about how homeowner's insurance works and how to know if certain perils are covered in your policy.
What Is Covered Peril in Homeowner's Insurance?
In homeowner's insurance, a peril is a hazard and event that causes loss or damage.
A covered peril is included in your policy. If your home suffers loss or damage from that type of peril, your insurance company will reimburse you a specified amount to cover the damage.
Because it protects against various hazards, homeowner's insurance is sometimes called "hazard insurance."
If a peril is excluded, then you would not have coverage for the damage caused by that hazard.
How Does Covered Peril in Homeowner's Insurance Work?
A homeowner's insurance policy will assign coverages to your home, property, garage, and other structures for different perils. If your home is damaged by a peril covered in your policy, you can submit a claim to have your insurance company pay for the damage or reimburse you for what you had to pay.
If your policy has a deductible, you will have to pay that amount before your insurance will cover any damages.
In order to have your claim approved, an insurance adjuster may come to your home to assess the damage, ensure that it was caused by a covered peril, and determine what type of settlement your insurance company will pay.
Another term for peril is risk. Your insurance policy will refer to perils in your policy contract. The term "insured peril" refers to risks or sources of damage that are insured.
Perils may also refer to the source of an injury for which you may be held liable, such as an accident that a visitor suffers on your property.
Covered perils in homeowner's insurance can include damage from:
Not all perils are protected on an insurance policy. For example, flood insurance is not part of homeowner's insurance and must be purchased as a separate policy. Perils that are uninsured or excluded may be referred to as "uninsured perils," "uninsured risks," or "exclusions."
If you live in a flood plain or other area at risk of flooding, you will need to purchase separate flood insurance through the National Flood Insurance Program.
Your homeowner's insurance policy documents will list which perils are covered and which are excluded. Some perils or risks may be added by endorsement or rider at an additional cost.
Named Peril vs. Open Perils (All Risk) Insurance Policy
Insured perils will always be specifically outlined in an insurance policy, with the exception of an open peril or all-risk policy.
In a named peril insurance policy, the insurance policy will only provide insurance coverage on losses due to particular perils or damages that are specifically stated in the insurance policy wording. An open perils policy only lists the perils that are not insured as exclusions.
|Named Perils Policy||Open Perils Policy|
|Covers specific risks||Covers all risks|
|Policy will name risks covered||Policy will name any exclusions|
|Less expensive monthly premium||More expensive monthly premium|
|Coverage for fewer potential hazards with lower payouts||Coverage for more potential hazards with higher payouts|
|May require purchasing extensions for additional coverage||May require purchasing extensions for additional coverage|
Since the named peril insurance policy only covers specific perils, it is usually less expensive than an all-risk or open perils insurance policy. Additional coverages may sometimes be added by endorsement.
An open peril, all risk, or all perils insurance policy is an insurance policy that covers all perils except perils that are specifically excluded in the insurance policy. It is more comprehensive and therefore more expensive.
Types of Covered Peril in Homeowner's Insurance
Your insurance policy declaration page (DEC) will show you what type of home insurance policy you have based on the policy form listed.
The insured perils will not be specifically listed on the DEC page. Instead, they will appear in the policy contract wording. The exclusions (or excluded perils) and policy conditions will also appear in the wording and are important to reference, especially in the case of an open perils policy where all perils are covered except for those specifically excluded.
Review your policy's exclusions to know which types of peril are covered under your homeowner's insurance. Covered perils can include a variety of hazards and damages.
Fire relates to something that produces a spark, flame, or glows (not smoke). Direct damage due to hostile fire is covered under the fire peril. Hostile fire is a fire that burns where it is not intended to burn, such as a bed or curtains.
Lightning directly damaging something or fire caused by lightning are both covered under the lightning peril. Damage to the electrical system or appliances in a home due to a lightning strike will also be covered under the lightning coverage. Any electrical damage that comes from the company providing the power is not.
Coverage for an explosion can vary depending on the insurance policy. A policy may cover just for explosions that originate within the covered structure or can also include explosions that originate outside and cause damage to the covered structure.
Windstorm relates to damage due to wind, including cyclones, tornadoes, and hurricanes. It covers the outside of the property and—depending on the cause of damage—the inside of the property. The interior usually is included if the wind causes an opening to the inside, such as blowing out a window. Some policies have additional deductibles for damage caused by wind and hurricanes.
Policies may include damage caused directly from hail. Usually, the inside of the structure is only covered by hail coverage if the hail itself breaches the structure and causes internal damage. If the hail entered because of an open window, the hail damage to the interior due to the open window would not be covered.
Riot or Civil Commotion
A riot is usually defined by three or more people causing damage to a property, and a civil commotion is usually defined as damage caused by a large number of people.
Aircraft damage is caused by any flying machines including, balloons, helicopters, airplanes, spacecraft, and self-propelled missiles.
Policies that cover snow as a peril usually include damage to your home from the weight of ice, snow, and sleet.
Water and Sewer
In some states, insurance companies are required by law to offer coverage for damage caused to your home by water and sewer backups.
- Covered peril in homeowner's insurance refers to the types of damage for which your insurance company will pay.
- Perils are hazards and events that can cause loss or damage, such as fire, wind, snow, or vandalism.
- Flood damage is not covered by homeowner's insurance and requires a separate flood insurance policy.
- In a named peril policy, insurance covers perils specifically stated in the policy.
- An open peril or all-risk policy, insurance covers all perils except those specifically excluded in the policy.
NC Department of Insurance. "A Consumer's Guide to Homeowner's Insurance," Page 2. Accessed July 9, 2020.
Consumer Financial Protection Bureau. "What Is Homeowner's Insurance? Why Is Homeowner's Insurance Required?" Accessed July 9, 2020.
NC Department of Insurance. "A Consumer's Guide to Homeowner's Insurance," Page 3. Accessed July 9, 2020.
USA.gov. "Property Insurance: Homeowners and Renters Insurance." Accessed July 9, 2020.
Consumer Financial Protection Bureau. "Shop For Homeowner's Insurance." July 9, 2020.
Virginia State Corporation Commission Bureau of Insurance. "Homeowners Insurance Consumer's Guide," Pages 4-5." Accessed July 9, 2020.