4.3 Section I Perils Insured Against and Exclusions

Section I Perils Insured Against

Named-peril Homeowners coverage (HO-2, plus contents on HO-3/HO-4/HO-6) lists the 16 broad-form perils. Open-peril coverage (HO-3 dwelling, HO-5) covers all direct physical loss except exclusions, so for open-peril you study the exclusions instead. The exam tests both the list and the boundaries.

The 16 broad-form perils (a useful mnemonic groups them):

1. Fire or lightning
2. Windstorm or hail
3. Explosion
4. Riot or civil commotion
5. Aircraft
6. Vehicles
7. Smoke
8. Vandalism / malicious mischief
9. Theft
10. Falling objects
11. Weight of ice, snow, sleet
12. Accidental discharge/overflow of water or steam (plumbing/HVAC)
13. Sudden/accidental tearing apart, cracking, burning, bulging of a steam/hot-water system
14. Freezing of plumbing/HVAC
15. Sudden/accidental damage from artificially generated electrical current
16. Volcanic eruption

Peril Boundaries and Common Traps

Named perils carry built-in conditions that exam questions exploit:

• Theft does not cover theft from a part of the residence rented to others, nor theft of property at a dwelling under construction (no contents yet).
• Freezing of plumbing is covered only if the insured used reasonable care (maintained heat or shut off and drained the system) — an unheated vacant home that freezes is excluded.
• Vandalism is excluded if the dwelling has been vacant more than 60 consecutive days before the loss.
• Falling objects and weight of ice/snow do not cover damage to outdoor property like awnings, fences, patios, or pavement.
• Water discharge covers sudden/accidental escape but not continuous or repeated seepage over weeks/months, and not the cost to repair the cracked pipe itself (only the resulting damage).

Section I Exclusions (the open-peril boundary)

The exclusions apply to all forms and define what open-peril coverage will NOT pay. Memorize these:

Anti-Concurrent Causation and Maintenance Exclusions

The water and earth-movement exclusions carry an anti-concurrent-causation (ACC) lead-in: 'We do not insure for loss caused directly or indirectly by [flood/earth movement]... regardless of any other cause contributing concurrently or in any sequence.' This means if a flood and a covered wind both damage the home, the flood-related damage is excluded even though wind contributed. This is why a hurricane's wind damage is covered but its storm-surge (flood) damage is not — the cause of the cracked-pipe coastal-claim split.

A second tested group is the maintenance / inherent-vice exclusions that apply to open-peril dwelling losses: wear and tear, deterioration, mold/fungus, smog/rust, settling/cracking, birds/vermin/insects, and damage by domestic animals. These reflect that insurance covers fortuitous (sudden, accidental) loss, not the gradual cost of upkeep.

The HO-3 Open-Peril Coverage C Named List

Because the HO-3 keeps Coverage C on a named-peril basis, you must know the broad-form perils that protect contents: fire/lightning, windstorm/hail, explosion, riot/civil commotion, aircraft, vehicles, smoke, vandalism, theft, falling objects, weight of ice/snow/sleet, accidental discharge of water/steam, freezing of plumbing, sudden tearing/cracking of a heating system, and artificially generated electrical current.

A classic trap: on an HO-3, a falling tree that damages the roof is covered on the open-peril building grant unless excluded, but the same tree crushing a patio sofa (Coverage C) is covered only if "falling objects" is a listed peril — which it is on the broad list, so the sofa is covered. Switch the contents peril to one not on the list (e.g., a marring/scratching cause) and the contents claim fails while the building claim succeeds.

Anti-Concurrent Causation and the Big Exclusions

Section I excludes a recurring set of perils the exam tests verbatim: ordinance or law, earth movement (earthquake, sinkhole, landslide), water damage (flood, surface water, sewer backup — though sewer/sump backup is addable by endorsement), power failure off premises, neglect, war, nuclear hazard, and intentional loss.

Many of these carry an anti-concurrent causation (ACC) lead-in: "We do not insure for loss... regardless of any other cause or event contributing concurrently or in any sequence to the loss." The ACC clause means that if an excluded peril (such as flood) combines with a covered peril (such as wind) to cause one loss, the entire loss is excluded. This is heavily tested in hurricane/storm-surge fact patterns; recognizing the ACC language is the key to the correct answer.

Ordinance or Law and the Endorsement Fix

The ordinance-or-law exclusion removes the extra cost to rebuild to current building codes after a covered loss — the added expense of bringing undamaged portions up to code, demolishing them, or meeting new standards. Because modern codes can add substantial cost, the Ordinance or Law endorsement (HO 04 77) buys back a percentage (commonly 10% of Coverage A, increasable). The exam pairs an old home, a partial fire loss, and a code upgrade requirement, then asks why the base policy will not pay the upgrade cost — the answer is the ordinance-or-law exclusion, solved by that endorsement.