Section I Perils Insured Against and Exclusions

Named perils on broad-form coverage

Named-peril (broad form) Coverage C — and the dwelling on HO-2 — pays only for losses caused by a listed peril. The standard ISO broad-form perils are often memorized with a mnemonic; the list includes:

• Fire or lightning
• Windstorm or hail
• Explosion
• Riot or civil commotion
• Aircraft
• Vehicles
• Smoke (sudden and accidental)
• Vandalism or malicious mischief
• Theft
• Falling objects
• Weight of ice, snow, or sleet
• Accidental discharge or overflow of water or steam (from plumbing, heating, A/C, appliance)
• Sudden and accidental tearing apart, cracking, burning, or bulging of a steam/hot-water/A/C system
• Freezing of plumbing, heating, A/C, or appliances
• Sudden and accidental damage from artificially generated electrical current
• Volcanic eruption

The first 11 perils (fire through vandalism/theft area) overlap the basic form; the broad form adds the water/ice/freezing/electrical/volcanic group.

Open-peril (special form) coverage

On HO-3, Coverage A and B are open-peril (special form): the policy covers all direct physical loss to the dwelling except losses the policy specifically excludes. On HO-5, this open-peril treatment extends to Coverage C as well.

The practical exam difference is the burden of proof:

• Under named-peril, the insured must prove the loss was caused by a listed peril.
• Under open-peril, the insurer must prove an exclusion applies to deny the claim.

That is why open-peril is broader. Note that even open-peril forms add their own special list of exclusions for the dwelling. These dwelling-specific exclusions limit the otherwise broad open-peril promise so the policy does not become a maintenance contract. The most heavily tested ones are wear and tear, deterioration, and inherent vice; mechanical breakdown; mold, fungus, and wet or dry rot; smog, rust, and corrosion; settling, cracking, shrinking, or expansion of foundations, walls, or pavements; birds, vermin, rodents, and insects; and theft of building materials from a dwelling under construction.

A producer should explain to clients that even open-peril coverage will not pay for gradual, expected, or maintenance-related damage; it targets sudden and accidental physical loss. When a question describes slowly worsening damage (a roof that wore out, a cracking foundation, creeping mold), the open-peril breadth does not save the claim because one of these special exclusions applies.

Section I exclusions

All HO forms share a core set of Section I exclusions. Several use anti-concurrent-causation language, meaning the loss is excluded even if a covered peril contributed in sequence with the excluded peril.

Flood and earthquake — the two big gaps

Flood is excluded under every Homeowners form. Flood is covered only through the National Flood Insurance Program (NFIP) or a private flood policy. Earthquake is also excluded and requires an earthquake endorsement or a separate earthquake policy. Expect a question giving a flood or earthquake loss and a victim who has only an HO-3 — the answer is no coverage under the HO policy.

Anti-concurrent-causation language

The earth-movement and water-damage exclusions begin with wording such as "We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss." This is the anti-concurrent-causation (ACC) clause. Its effect is to defeat the old "efficient proximate cause" argument: if an excluded peril (flood, earthquake, mudflow) is part of the chain, the loss is excluded even if a covered peril (wind, fire) also contributed.

A common trap question describes a hurricane that brings both wind (covered) and storm surge / flooding (excluded). The wind portion is payable under the HO policy, but the flood portion is excluded by the ACC water-damage language, and only NFIP/private flood pays the surge damage. Adjusters and exams therefore separate wind damage from flood damage on hurricane claims.

A note on theft and vacancy

Theft coverage tightens when a dwelling is under construction (theft of building materials is excluded until the insured moves in) and when the residence is vacant. A producer who places a policy on a home the insured has not yet occupied should flag these gaps. The exam rewards recognizing that the status of the dwelling — occupied, under construction, or vacant — changes which perils respond.

The Standard Exclusion List

Section I commonly excludes: ordinance or law, earth movement, water damage (flood/surface water/sewer backup), power failure, neglect, war, nuclear hazard, and intentional loss. Several are addable by endorsement (water back-up, ordinance or law); flood and earthquake require separate policies. Recognizing that flood and earth movement are excluded everywhere in standard property forms is the single most-tested exclusion fact.

Anti-Concurrent-Causation Lead-In

The exclusions begin with anti-concurrent-causation (ACC) wording — "we do not insure for loss... regardless of any other cause or event contributing concurrently or in any sequence." This lets the insurer deny the entire loss when an excluded peril (flood, earth movement) combines with a covered one (wind). It is why hurricane wind-vs-water disputes are litigated and why the ACC clause is a recurring exclusion question.