4.3 Section I Perils Insured Against and Exclusions

Perils Insured Against

Section I describes what triggers coverage. The structure of coverage depends on the form:

• HO-3 dwelling (Cov A/B): open perils - covered unless excluded.
• HO-3 contents (Cov C) and HO-2/HO-4/HO-6: the broad-form named perils (16 perils).
• HO-5: open perils for both dwelling and contents.
• HO-8: basic named perils (a shorter list, roughly 10-11 perils) with modified valuation.

Understanding which list applies to which coverage on which form is the single most-tested mechanical concept in the homeowners chapter.

The 16 Broad-Form Named Perils

Memorize this list - exam questions ask whether a specific cause is included.

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

Trap: items 12-15 are the 'broad form' additions over basic form. They require the event to be sudden and accidental - gradual seepage, continuous leakage over weeks, or wear-and-tear is excluded.

Section I Exclusions

Even the open-perils HO-3/HO-5 carve out major exclusions. The classic ones (often grouped as the 'concurrent causation' exclusions, applied regardless of any other cause):

• Ordinance or Law (beyond the 10% Additional Coverage)
• Earth Movement (earthquake, landslide, sinkhole, mudflow)
• Water Damage (flood, surface water, sewer/drain backup, groundwater seepage)
• Power Failure (off-premises)
• Neglect (failure to protect property after a loss)
• War
• Nuclear Hazard
• Intentional Loss (by an insured)
• Governmental Action (seizure/destruction)

Anti-concurrent-causation language means if an excluded cause (e.g., flood) contributes to the loss in any sequence, the loss is excluded even if a covered peril also contributed. This is heavily tested.

The Anti-Concurrent-Causation Exclusion Set

Section I exclusions are organized so that the listed causes are excluded "regardless of any other cause contributing concurrently or in any sequence." The core group to memorize is ordinance or law, earth movement, water damage (flood, surface water, sewer/drain backup unless endorsed), power failure originating off-premises, neglect, war, nuclear hazard, and intentional loss. A second group bars wear and tear, deterioration, mechanical breakdown, mold, smog, rust, inherent vice, latent defect, and damage from insects, vermin, birds, or domestic animals.

The exam pattern is to combine an excluded originating cause with a covered ensuing peril and ask which part pays — the ensuing loss is covered, the originating exclusion is not.

Reading Open-Peril Coverage Through Its Exclusions

Because HO-3 is open-peril on the structure, the exclusions, not a peril list, set the boundary for Coverages A and B. Coverage C stays named-peril, so a contents loss must trace to one of the 16 broad-form perils (fire/lightning, windstorm/hail, explosion, riot, aircraft, vehicles, smoke, vandalism, theft, volcanic eruption, falling objects, weight of ice/snow/sleet, accidental water discharge, sudden tearing/cracking of a heating system, freezing, and sudden artificial electrical current). The classic distractor pairs an open-peril structure loss (covered absent an exclusion) with a contents loss that fails the named-peril test.

Special Limits on Certain Property (Coverage C Sublimits)

Even when Coverage C applies, certain categories carry internal sublimits. These do not increase the limit - they cap what is paid for that category. Memorize the common ISO sublimits:

Trap: jewelry has a $1,500 theft sublimit but is otherwise covered to the full Coverage C limit for other perils (e.g., fire). A scheduled personal property endorsement (or 'floater') is needed to raise the theft limit and add open-perils coverage on the jewelry.

Basic vs. Broad vs. Special - A Layered View

Think of the perils lists as concentric circles. The basic form perils (used in HO-8 and the old DP-1 dwelling form) cover the original named causes: fire/lightning, windstorm/hail, explosion, riot, aircraft, vehicles, smoke, vandalism, and volcanic eruption - roughly 10-11 perils. The broad form adds the next layer (theft, falling objects, weight of ice/snow/sleet, accidental water discharge, freezing, sudden electrical damage). The special/open-perils basis abandons lists entirely and covers everything not excluded.

When a question describes a loss, first identify the form and which coverage is involved, then test the cause against the right circle. A water-discharge loss is covered under HO-2 contents (broad) but would not be a basic-form contents peril under HO-8.

Gradual vs. Sudden - The Maintenance Trap

Homeowners forms repeatedly exclude losses tied to the insured's failure to maintain the property. Even open-perils HO-3/HO-5 exclude wear and tear, deterioration, marring, mechanical breakdown, rust/corrosion, mold/fungus, smog, settling/cracking/shrinking, and damage by birds, vermin, rodents, or insects. These are predictable maintenance items, not fortuitous losses.

The key exam discriminator: a pipe that suddenly bursts and floods the kitchen is a covered water-discharge event; a pipe that slowly leaked for months behind a wall causing rot and mold is excluded as gradual/neglect. The same physical pipe can be covered or excluded depending on whether the cause was sudden and accidental versus continuous and foreseeable.