Our heroine, Pauline, is always in a fix. This time Pauline’s great, great grandfather’s violin is ruined by water damage so she files a claim.
Have you ever tried to file a claim on your homeowner insurance policy to have the company or your agent tell you that it’s not covered because it’s not a named peril? What the heck does that mean?!
Well, according the International Risk Management Institute (IRMI), a peril is simply a cause of loss – for example fire, windstorm or collision. A named peril is one that is specifically listed in and covered by a particular policy, unless it is excluded under the Exclusions section of the policy. Open perils refers to property insurance that insures against loss to covered property from all causes except those that are specifically excluded.
Your personal property is covered under Coverage C in your homeowners policy (typically an HO3) and is covered for loss caused by a named peril – fire or lightning, windstorm or hail, explosion, riot or civil commotion, aircraft, vehicles, smoke, vandalism or malicious mischief, theft, falling objects, weight of ice, snow or sleet, accidental discharge or overflow of water or steam, sudden and accidental tearing apart/ cracking/ burning or bulging of equipment such as a water heater or air conditioner, Freezing, sudden and accidental damage from artificially generated electric current, or volcanic eruption – unless otherwise excluded by things such as earthquake, flood, or neglect. An HO5 policy, offered by many companies for an increased premium, is an open perils policy.
In our example, Pauline has your normal HO3 policy, as most of us do. Let’s say her great, great grandfather’s violin, which she stored in her basement, was ruined by water leaking into the basement after a heavy rain which flooded your yard. Her insurance company will tell her that it’s not covered – floods and ground water seepage are not named perils. In fact, they are listed as exclusions. Sorry, Pauline, you should have scheduled that violin.