Named Peril vs. Open Peril Homeowner Policies

Many today feel all homeowner policies are the same, that they are a commodity of sorts. In our professional opinion this is not the case. One glaring difference between homeowner policies is whether they are “Named Peril” or “Open Peril” homeowner policies.

Named Peril insurance policies specifically list the risks they will cover your home for. The policy contract will cover such happenings as wind, lightning, fire, smoke, theft, etc. If something happens to your home that doesn’t fall into the insurance policies definitions of the name peril terms than there is no coverage.

Open Peril insurance policies state that all risks are covered except for a list of exclusions that are outlined in the policy contract. This type of contract gives broader coverage than a Named Peril because the incident that happened to your home or personal contents doesn’t have to fit into a certain definition of coverage. As long as the incident isn’t excluded it is covered.

A homeowner policy that is using a “Named Peril” contract will always be cheaper than an “Open Peril” contract. It is important to know this so that you don’t fall victim to purchasing solely on price. You may be excited to see a savings from one policy to the next but that savings could be at a much higher cost and exposure to you. Unfortunately you may not know this until you actually have a claim and are staring at a bill that would have been covered under an Open Peril policy but is not covered now under your Named Peril policy.

This is just one example of what may be different between homeowner policies. Other things like deductibles, specialty items coverage, fallen tree coverage, water backing up sewers and drains, and earthquake coverage are a few others to consider.