4.3 Section I Perils Insured Against and Exclusions

The Broad Named-Peril List

The broad form named perils apply to HO-2 (both coverages) and to HO-3/HO-6 contents. The list contains 16 perils:

1. Fire or lightning
2. Windstorm or hail
3. Explosion
4. Riot or civil commotion
5. Aircraft
6. Vehicles
7. Smoke
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
13. Sudden/accidental tearing or cracking of a heating/AC system
14. Freezing of plumbing/heating/AC
15. Sudden/accidental damage from artificial electrical current
16. Volcanic eruption

Open Perils on HO-3 and HO-5

The dwelling under HO-3 and everything under HO-5 is open perils: any direct physical loss is covered unless the cause is excluded. This is why a mysterious crack in an HO-5 wall is generally paid, while the same loss to HO-3 contents (named perils) is denied unless tied to a listed cause.

Burden of proof: open perils = the insurer must prove an exclusion; named perils = the insured must prove a listed peril.

The Core Section I Exclusions

All homeowners forms share a standardized exclusion list. The most-tested exclusions are:

Anti-Concurrent Causation

Homeowners forms include anti-concurrent causation language: if an excluded peril and a covered peril combine to cause one loss, the entire loss is excluded. The classic example is Hurricane wind + storm surge: wind damage alone is covered, but if surge (flood) contributes to the same damage, the excluded flood peril can wipe out coverage for that portion.

Exam application: This is why coastal claims hinge on whether wind or water caused each item of damage.

Special Limitations on Open-Peril Forms

Even on open-peril HO-3 and HO-5, certain causes are limited rather than fully excluded. These special limitations narrow coverage for losses the policy still partly addresses:

• Theft of property from a dwelling under construction is not covered until the insured moves in.
• Wind/hail, ice/snow damage to outdoor antennas, awnings, and screens is restricted.
• Freezing of plumbing is excluded if the insured did not maintain heat or shut off the supply.
• Wear and tear, deterioration, mechanical breakdown, rust, mold, and infestation are excluded as maintenance issues, not insured losses.

These limitations are why "open perils" does not mean "all risk with no conditions" on the exam.

Mapping a Loss to Coverage

A reliable exam method is to walk every property loss through three questions in order: (1) Is the cause a covered peril or, on an open-peril form, not excluded? (2) Is the damaged item covered property under A, B, or C? (3) Does a special limit, sublimit, or condition reduce the payout? Working in that sequence prevents the common error of jumping to a dollar figure before confirming the peril is covered at all. Most homeowners property questions are designed so that one of these three gates quietly closes.

Ordinance or Law in Practice

When an older home is partially destroyed, a building code may require the entire structure to be brought up to current standards. Standard policies pay only to restore the damaged portion to its pre-loss condition. The Ordinance or Law exclusion blocks the extra cost of code-required upgrades and demolition; an endorsement (commonly 10% of Coverage A) restores it. Example: a fire damages 40% of a home, but code forces a full rebuild; the endorsement funds the demolition and upgrade gap the base policy excludes.

Reading the Named-Peril List Carefully

Several named perils carry hidden conditions the exam exploits:

• Theft does not cover loss from a part of the residence rented to others, nor property simply "mysteriously disappearing."
• Vehicles excludes damage to fences, driveways, and walks caused by a resident of the household.
• Water discharge (peril 12) covers sudden escape but not continuous or repeated seepage over weeks or months, which is treated as maintenance.
• Freezing (peril 14) is excluded if the insured failed to maintain heat or shut off and drain the system in a vacant dwelling.

These conditions explain why a covered-sounding loss can still be denied.

Earth Movement and Water Endorsements

Because flood and earth movement are universally excluded, producers must offer solutions. Flood is placed through the National Flood Insurance Program (NFIP) or private flood markets. Earthquake is added by endorsement and typically carries a percentage deductible (for example, 10-15% of Coverage A) rather than a flat dollar amount, so a $400,000 home could face a $40,000-$60,000 deductible before earthquake coverage responds. Sinkhole and mine-subsidence coverage are handled by separate state programs or endorsements in affected regions, another reason these exclusions matter on the exam.

Section I Perils Insured Against and Exclusions

Homeowners Section I perils depend on the form. HO-3 insures the dwelling (A/B) open-peril ("all risk" except what's excluded) and personal property (C) on named perils; HO-5 insures both open-peril; HO-2 insures both on named perils. The named-peril list (used for HO-2 contents and HO-3 contents) is tested by memory: fire/lightning, windstorm/hail, explosion, riot, aircraft, vehicles, smoke, vandalism, theft, falling objects, weight of ice/snow/sleet, accidental discharge of water, freezing, and electrical surge.

The tested exclusions (apply to all forms) are: ordinance or law, earth movement (earthquake/landslide), water damage (flood, surface water, sewer backup), power failure (off-premises), neglect, war, nuclear hazard, and intentional loss. Several can be bought back by endorsement (earthquake, water backup, ordinance or law).

Worked burden-of-proof trap: A homeowner's hardwood floor buckles for an unknown reason. On the HO-3 dwelling (open-peril), the loss is covered unless the insurer proves an exclusion (e.g., flood or seepage); on HO-2 contents (named peril), the insured must prove a listed peril caused it. The same physical loss can be covered on the dwelling but denied on contents.

Exclusion scenario: A sewer backs up and floods a finished basement. The base form excludes water backup; only the HO 04 95 Water Backup endorsement responds. Separately, rising river flood water needs NFIP — neither the base form nor the backup endorsement covers true flood, the most common exclusion trap.