4.3 Section I Perils Insured Against and Exclusions

Named Perils vs. Open Perils

The "Perils Insured Against" section is where the form's coverage trigger lives. The exam tests two opposite burdens of proof:

• Named perils (HO-2, and Coverage C of HO-3): the policy lists the covered causes of loss. The insured must prove the loss was caused by a listed peril. If a cause is not on the list, there is no coverage.
• Open perils / special / all-risk (Coverage A & B of HO-3; everything in HO-5): the policy covers all direct physical loss EXCEPT what is specifically excluded. The insurer must prove an exclusion applies to deny the claim.

This burden shift is the practical reason HO-3 and HO-5 cost more and are preferred — the insured does not have to fit the cause into a list.

The Broad Form Named Perils

The HO-2 / Coverage C broad-form list includes the basic perils plus several more. A classic memory aid for the basic group is the perils common across forms; the broad group adds the rest:

Note the recurring qualifier "sudden and accidental": gradual leaks, seepage over weeks, and wear & tear are NOT covered. A pipe that bursts is covered; a pipe that drips for two months and rots a subfloor is excluded.

Section I Exclusions (Apply to ALL Forms)

Even the open-perils forms exclude the following. Memorize these — they are heavily tested:

• Ordinance or law (cost to comply with building codes during rebuild) — buy back with HO 04 77
• Earth movement (earthquake, landslide, sinkhole, settling) — earthquake bought separately (HO 04 54)
• Water damage — flood, surface water, sewer/drain backup, and water below the ground (sump/seepage). Sewer backup can be endorsed; flood requires a separate NFIP policy.
• Power failure (off premises)
• Neglect to save/preserve property
• War
• Nuclear hazard
• Intentional loss by an insured
• Governmental action (seizure/destruction, except to stop a fire)

The Anti-Concurrent Causation Clause

These exclusions are introduced by language stating they apply "regardless of any other cause or event contributing concurrently or in any sequence to the loss." This anti-concurrent causation wording means that if an excluded peril (e.g., flood) combines with a covered peril (e.g., wind) to cause damage, the excluded portion is still excluded. This was litigated heavily after hurricanes and is a favorite exam concept.

Theft Coverage Restrictions

Theft is a covered peril, but the form restricts it in three situations the exam loves to test:

• Theft from a dwelling under construction (and of materials/supplies at the building site) is excluded until the dwelling is finished and occupied.
• Theft from a part of the residence rented to others (a boarder's unit) is excluded as to the tenant's portion.
• Theft away from the residence premises of property at any other residence the insured owns or rents is limited unless the insured is temporarily living there (e.g., a student in a dorm gets limited coverage).

Vandalism and Vacancy

Vandalism and malicious mischief is a covered peril, but coverage is suspended once the dwelling has been vacant for more than 60 consecutive days immediately before the loss. After 60 days of vacancy, a vandalism, glass-breakage, or related loss is not covered — a classic exam trap that pairs the vacancy timeline with the peril. A building under construction is not considered vacant for this purpose.

Mold, Fungus, and Wet Rot

Most current forms add a mold/fungus/wet-rot limitation, capping any resulting mold remediation (commonly $10,000) even when the underlying water event was covered. Mold caused by a non-covered cause (flood, long-term seepage) is excluded entirely. Candidates should connect this to the sudden-and-accidental water rule: a covered burst pipe may still trigger a capped mold sublimit rather than unlimited remediation.

The Three Water Exposures, Distinguished

Water questions trip up more candidates than any other property topic because three different water events get three different treatments:

1. Sudden and accidental discharge from a plumbing, heating, or appliance system (a burst pipe) — covered under the broad/special forms.
2. Surface water and flood (rising water, storm surge, overflow of a body of water) — excluded; only an NFIP or private flood policy responds.
3. Sewer or drain backup and sump overflow — excluded by the base form but buyable with the HO 04 95 water backup endorsement.

Match the cause in the question to one of these three buckets before deciding coverage. A pipe bursting inside a wall is covered; the same volume of water arriving as storm surge is not.

Freezing and Vacancy Interaction

The freezing-of-plumbing peril carries its own condition: coverage applies only if the insured used reasonable care to maintain heat or shut off the water and drained the system while the dwelling was vacant or unoccupied. Tie this to the 60-day vacancy rule — an unheated, vacant home that suffers frozen-pipe damage may be denied on two grounds at once. Exam scenarios often bundle vacancy, freezing, and vandalism to test whether you can apply each condition independently.

Glass, Collapse, and Other Embedded Coverages

Several perils sit inside the forms with their own rules: glass breakage is covered but suspended after 60 days of vacancy; collapse is an Additional Coverage triggered only by specified causes (hidden decay, weight of contents or people, defective construction discovered during construction), not by mere cracking or settling. Knowing that settling, cracking, bulging, and shrinkage are not a covered collapse prevents a common wrong answer.