4.3 Section I Perils Insured Against and Exclusions
Key Takeaways
- The basic peril list (HO-8) is fire/allied perils; the broad list (HO-2, HO-3 contents) adds water-discharge, ice weight, falling objects, and appliance perils.
- Open-peril forms cover all risk except stated exclusions; no peril list applies.
- All forms exclude ordinance/law, earth movement, water (flood/backup/seepage), power failure, neglect, war, nuclear, intentional loss, and governmental action.
- Anti-concurrent causation excludes flood/earth-movement losses even when a covered peril contributes concurrently.
- Sudden/accidental pipe discharge is covered; flood, gradual seepage, and sewer backup are excluded absent endorsement.
Named Peril Lists: Basic vs. Broad
Named-peril Homeowners forms draw from two lists. The basic list (used by HO-8 and the lowest-tier dwelling coverage) contains the original fire-and-allied perils. The broad list (used by HO-2 and for Coverage C on the HO-3) adds several water-related and falling-object perils. Open-peril forms (HO-3 dwelling, HO-5 throughout) do not use a list at all - they cover all risk except stated exclusions.
Basic named perils (HO-8): fire and lightning; windstorm and hail; explosion; riot and civil commotion; aircraft; vehicles; smoke; vandalism and malicious mischief; theft; volcanic eruption.
Broad list adds (HO-2, and Coverage C of HO-3): falling objects; weight of ice, snow, or sleet; accidental discharge or overflow of water or steam; sudden and accidental tearing apart/cracking/burning/bulging of a heating or AC system; freezing of plumbing; sudden and accidental damage from artificially generated electrical current. The mnemonic "the broad form adds the perils a homeowner can suffer from inside the house" helps recall the water and appliance perils.
Section I Exclusions (Apply to ALL Forms)
Even open-peril forms exclude these. The exam tests recognition that these losses are not covered regardless of whether the form is named or open peril:
| Exclusion | Notes / Trap |
|---|---|
| Ordinance or law | Cost to comply with building codes; partially restored by 10% Additional Coverage |
| Earth movement | Earthquake, landslide, sinkhole - needs separate endorsement/policy |
| Water damage | Flood, surface water, sewer/drain backup - flood needs NFIP/private flood; backup is endorsable |
| Power failure | Off-premises power interruption |
| Neglect | Failure to protect property after a loss |
| War | Including undeclared war and warlike acts |
| Nuclear hazard | Reaction, radiation, contamination |
| Intentional loss | By or at the direction of an insured |
| Governmental action | Seizure or destruction by order |
These eight to nine exclusions are sometimes recalled with the mnemonic that they are the perils too catastrophic or controllable to be insured in a standard homeowners contract.
Anti-Concurrent Causation
The water and earth-movement exclusions include an anti-concurrent causation (ACC) lead-in: the loss is excluded "regardless of any other cause or event contributing concurrently or in any sequence to the loss." This means if an excluded peril (e.g., flood) combines with a covered peril (e.g., wind) to cause the same damage, the entire loss is excluded - the insurer does not have to apportion. This is a major exam concept and the reason flood and earthquake must be insured separately.
Exam trap: A burst pipe causing sudden water discharge IS covered (it is a broad-form peril). But continuous or repeated seepage over weeks, flood (surface water), and sewer backup (absent endorsement) are all excluded. Distinguish sudden/accidental discharge (covered) from gradual seepage and external water (excluded).
Theft and Other Peril Restrictions
The theft peril carries its own exclusions even on open-peril forms. Theft is not covered when committed by an insured, theft in or from a dwelling under construction (until completed and occupied), and theft from that part of a residence rented to someone who is not an insured. Off-premises theft of property at a residence the insured does not occupy is also restricted. These carve-outs explain why a tenant's theft of the landlord's furnishings, or jewelry stolen during a remodel of an unoccupied new build, may be denied.
Vandalism and glass breakage are suspended once a dwelling has been vacant for more than 60 consecutive days before the loss (the vacancy condition discussed earlier). Mold, fungus, and wet rot are excluded except a limited amount when resulting from a covered water loss. Birds, vermin, rodents, and insects are excluded as wear-and-tear type causes.
Exam trap: Distinguish vacant (no occupant and no contents) from unoccupied (furnished but temporarily empty). Only true vacancy beyond the stated period triggers the suspension of vandalism, glass, and certain water perils - a frequently misread distinction on licensing exams.
A homeowner's basement is flooded when a nearby river overflows during a storm; wind also tears off some siding in the same storm. Under a standard HO-3, how is the river-flood basement damage treated?
Which of the following water losses would typically be COVERED under a standard Homeowners broad/special form without an endorsement?
Section I Exclusions Common to All HO Forms
Every Homeowners form excludes the same core perils through the anti-concurrent-causation lead-in: ordinance or law, earth movement (earthquake/landslide/sinkhole), water damage (flood, surface water, sewer/drain backup, subsurface water), power failure (off-premises), neglect, war, nuclear hazard, intentional loss, and governmental action. The anti-concurrent wording means if an excluded peril (flood) combines with a covered peril (wind) to cause a loss, the entire loss is excluded — the most-tested Section I trap, especially after hurricanes where wind and flood overlap.
Sewer/drain backup and earthquake are added only by endorsement.
Covered vs. Excluded Water and the Hurricane Trap
Water losses divide sharply: accidental discharge from a plumbing, heating, or appliance system inside the dwelling is covered; flood, surface water, and sewer/drain backup are excluded without endorsement.
After a hurricane, wind-driven rain entering through a wind-created opening is generally covered as wind damage, but storm surge and rising water are flood — excluded and payable only by the NFIP. Because anti-concurrent causation excludes the entire loss when flood combines with a covered peril, adjusters and exam questions parse exactly which water caused which damage. Sewer backup is added by the water back-up endorsement.