Named Perils vs. All-Risk: Understanding What Your Home Insurance Actually Covers

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Named Perils vs. All-Risk: Understanding What Your Home Insurance Actually Covers

The scope of your property coverage depends entirely on whether your policy uses the **Named Perils** approach or the **Open Perils** (often called All-Risk) approach. This difference dictates who bears the burden of proof when filing a claim.

1. Named Perils Policy (HO-1, HO-2)

Under a **Named Perils** policy, the policy clearly lists the specific dangers (perils) that are covered. If the cause of your loss is not explicitly on that list, the claim will be denied.

  • Burden of Proof: The policyholder must prove the loss was caused by one of the named perils.
  • Common Perils: Fire, theft, vandalism, wind, and hail. Exclusions are common.

2. Open Perils Policy (HO-3, HO-5)

**Open Perils** (or **All-Risk Insurance**) covers all causes of loss *except* those specifically and explicitly excluded in the policy language. This provides far broader protection.

  • **Burden of Proof:** The insurer must prove the loss was caused by a specific exclusion (e.g., flood, earthquake, war) for the claim to be denied. If the cause isn’t excluded, it’s covered.
  • **Common Exclusions:** Earth movement, nuclear hazard, flood, and wear and tear.
Crucial Distinction: Most standard homeowner policies (HO-3) cover the dwelling structure (Coverage A) on an **Open Perils** basis, but the contents (Coverage C) are often still covered on a restrictive **Named Perils** basis. Always check both sections of your policy!

For the best peace of mind and the broadest coverage, ensure your primary dwelling structure is covered on an **Open Perils** basis.