Named Perils vs. Open Perils: Two Ways a Policy Decides What's Covered
A named-perils policy covers only the causes of loss it lists. An open-perils policy covers everything except what it excludes. The difference changes who has to prove what in a claim. Here is how it works.
Property insurance policies use one of two basic approaches to decide which causes of loss are covered:
- Named perils: covers only the causes of loss specifically listed in the policy.
- Open perils (sometimes called "all risk" or "special form"): covers direct physical loss from any cause except those specifically excluded.
Side by side
| Named perils | Open perils | |
|---|---|---|
| What's covered | Only listed causes, such as fire, windstorm, theft | Everything not excluded |
| If a cause isn't mentioned | Not covered | Covered, unless excluded |
| Who generally must show what | The policyholder shows a listed peril caused the loss | The insurer shows an exclusion applies |
| Typical cost | Lower | Higher |
Where you'll see each
On a typical homeowners policy (often an HO-3 form):
- the dwelling is often covered on an open perils basis;
- personal property is often covered on a named perils basis.
That means a cause of loss not on the list, such as an accidental spill ruining a rug, might be covered for the building but not for belongings, depending on the policy. Some homeowners forms (often called HO-5 or comprehensive forms) cover personal property on an open perils basis too.
Renters (HO-4) and condo (HO-6) policies commonly cover belongings on a named perils basis. Dwelling fire policies for rentals come in basic, broad, and special forms with increasingly broad coverage; see landlord insurance.
An example
A hypothetical accident: a bookshelf tips over and breaks an expensive TV.
- Named perils on personal property: accidental breakage usually isn't a listed peril, so it's likely not covered.
- Open perils on personal property: covered unless an exclusion applies.
Open perils still has exclusions
Open perils isn't unlimited. Common exclusions include flood, earth movement, wear and tear, gradual leaks, mold (with limited exceptions), pests, intentional acts, and others. See exclusions, endorsements, and riders.
The takeaway
Named perils covers only what's listed; open perils covers everything except what's excluded. Check which approach applies to your dwelling and your belongings separately, and if broader coverage on belongings matters to you, ask about open perils options.
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