Section I Perils and Exclusions
Key Takeaways
- The 16 broad-form named perils apply to Coverage C under every HO form and to Coverage A/B under HO-2 and HO-8
- Under HO-3 and HO-5, Coverage A and B are open-peril, meaning coverage applies unless a specific exclusion removes it — the insurer bears the burden of proving an exclusion applies
- General exclusions apply across all Section I coverages regardless of peril basis: ordinance or law, earth movement, water damage (flood, surface water, sewer backup), power failure off premises, neglect, war, nuclear hazard, intentional loss, and governmental action
- Open-peril forms add further exclusions beyond the general list: wear and tear, mechanical breakdown, rust/corrosion, smog, mold/fungus (limited buyback available), and damage from birds, vermin, rodents, or insects
- The anti-concurrent causation clause lets an insurer deny an entire claim if an excluded peril (like flood) combines with a covered peril to cause the loss
Perils and exclusions form the true battleground of any property claim, and homeowners policies are structured with two distinct approaches that candidates must never confuse: named-peril coverage, where a loss must be caused by a peril specifically listed in the policy, and open-peril coverage, where every cause of loss is covered unless the policy specifically excludes it. Understanding which coverage part uses which approach — and which exclusions apply regardless of approach — is what separates a candidate who merely recognizes vocabulary from one who can correctly answer a scenario-based claim question.
The 16 Broad-Form Named Perils
Coverage C is written on a named-peril basis under every standard homeowners form (even HO-3), and Coverage A/B under HO-2 and HO-8 uses this same list. The 16 broad-form perils are: (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 or steam from a plumbing, heating, air conditioning, or automatic fire protection system or from a household appliance, (13) sudden and accidental tearing apart, cracking, burning, or bursting of a steam or hot water heating system, air conditioning, or automatic fire protection system, or an appliance for heating water, (14) freezing of a plumbing, heating, air conditioning, or automatic fire protection system or of a household appliance, (15) sudden and accidental damage from artificially generated electrical current, and (16) volcanic eruption. Each of these perils carries its own internal qualifiers and exceptions — for example, the freezing peril requires the insured to have used reasonable care to maintain heat in the building or to have drained the system while the building was vacant, unoccupied, or under construction, or coverage does not apply.
Open-Peril Coverage A/B: The Flip in Burden of Proof
Under HO-3 and HO-5, Coverage A (Dwelling) and Coverage B (Other Structures) are written on an open-peril basis, sometimes called "special form" or "all-risk." This means any cause of loss is covered unless the cause of loss is specifically listed as an exclusion. The practical, testable consequence is a shift in the burden of proof: under named-peril coverage, the insured must affirmatively demonstrate that a listed peril caused the loss; under open-peril coverage, the insurer must affirmatively demonstrate that an exclusion applies in order to deny the claim. This distinction shows up constantly in exam scenarios that describe an unusual or hard-to-classify loss (for example, a tree falling through a roof during a windstorm, or a pipe bursting from an unexplained cause) and ask which coverage basis would more likely result in payment.
General Exclusions Applicable to All Section I Coverage
Regardless of whether a coverage part is named-peril or open-peril, a set of general exclusions applies across the entire homeowners policy:
| General Exclusion | What It Removes From Coverage | Endorsement or Fix Available |
|---|---|---|
| Ordinance or Law | Losses from enforcement of construction/repair/demolition codes, beyond the separate additional coverage | Purchase increased Ordinance or Law limit |
| Earth Movement | Earthquake, landslide, mine subsidence, sinkhole collapse, regardless of concurrent cause | Separate earthquake/difference-in-conditions policy |
| Water Damage | Flood, surface water, tidal water, and water backing up through sewers/drains or below ground | Sewer backup endorsement; separate flood policy for true flood |
| Power Failure | Loss from utility failure occurring off the residence premises | Generally none; resulting covered-peril loss may still apply |
| Neglect | Insured's failure to use reasonable means to save/protect property at and after a loss | None — insured must mitigate damage |
| War | Undeclared war, warlike action, insurrection, rebellion, revolution | Not available in personal lines |
| Nuclear Hazard | Nuclear reaction, radiation, radioactive contamination, regardless of cause | Not available in personal lines |
| Intentional Loss | Any loss caused by or at the direction of an insured intending to cause it | None — bars coverage for that insured |
| Governmental Action | Destruction, confiscation, or seizure by order of public authority (narrow fire-prevention exception) | None |
Additional Exclusions Unique to Open-Peril Coverage A/B
Because open-peril coverage is so broad by design, ISO layered on a second, longer list of exclusions that apply only to Coverage A and B under HO-3/HO-5 to prevent the policy from becoming a maintenance or warranty contract. These include: wear, tear, marring, deterioration; mechanical breakdown; smog, rust, or other corrosion; smoke from agricultural smudging or industrial operations; discharge, dispersal, seepage, or release of pollutants (unless caused by a specified peril); settling, cracking, shrinking, bulging, or expansion of pavements, patios, foundations, walls, floors, roofs, or ceilings; birds, vermin, rodents, or insects; and mold, fungus, or wet rot (though most carriers offer a limited buy-back endorsement restoring a modest sublimit, commonly in the low thousands of dollars, for mold remediation when the mold results from a covered water loss).
Concurrent Causation Traps
A favorite advanced exam trap involves the anti-concurrent causation clause attached to the earth movement and water damage exclusions: these exclusions apply "regardless of any other cause or event contributing concurrently or in any sequence to the loss." This means that if an excluded peril (such as flooding) combines with a covered peril (such as wind) to produce a single loss, the insurer can deny the entire claim, not merely the flood-caused portion, because the excluded cause was present anywhere in the chain of causation. Candidates should also remember that even though open-peril Coverage A/B carries more exclusions than named-peril Coverage C, in practice open-peril coverage is still broader overall because it covers the vast universe of unlisted, non-excluded perils that a named-peril form would never reach — the extra exclusions merely carve back specific maintenance-type and catastrophic-flood/earthquake risks that the industry has decided not to underwrite within a standard homeowners premium.
A pipe bursts inside a wall due to an unexplained sudden failure, causing water damage to the dwelling. The homeowner has an HO-3 policy. How does the peril basis of Coverage A affect who must prove what?
A homeowner's basement floods after heavy rain causes surface water to seep in around the foundation. Which general Section I exclusion applies, and what must the insured purchase to obtain coverage for this type of loss?
A wind and flood event strikes a coastal home simultaneously, and the insurer cannot separate how much damage was caused by wind alone versus flood alone. Under the anti-concurrent causation clause, how will the claim likely be handled?