4.3 Section I Perils, Open vs Named

Open Perils vs Named Perils — and the Burden of Proof

The trigger words on the personal lines exam are "open perils" (formerly "all risk") versus "named perils."

• Named perils: the form lists covered causes of loss. The insured carries the burden of proof — they must show the loss was caused by a listed peril.
• Open perils: the form covers any sudden and accidental direct physical loss unless the cause is specifically excluded. The burden flips to the insurer — it must prove an exclusion applies.

That shift in burden is exactly why open-perils coverage is broader and costs more. On the HO-3, the dwelling and other structures are open perils while personal property is broad-form named perils — so a Coverage C loss requires the insured to fit it into the 16-peril list.

Basic-Form Named Perils (HO-8, DP-1 with EC)

1. Fire or lightning
2. Windstorm or hail
3. Explosion
4. Riot or civil commotion
5. Aircraft
6. Vehicles
7. Smoke
8. Vandalism and malicious mischief
9. Theft (limited on HO-8/DP forms)
10. Volcanic eruption

Broad-Form Named Perils (the "16 Perils")

The broad form adds six perils to the basic list. Memorize the full 16 — Coverage C on the HO-2, HO-3, HO-4, HO-5, and HO-6 uses this set:

1. Fire or lightning
2. Windstorm or hail
3. Explosion
4. Riot or civil commotion
5. Aircraft
6. Vehicles
7. Smoke
8. Vandalism and malicious mischief
9. Theft
10. Falling objects (interior/contents damage covered only if the exterior is first breached)
11. Weight of ice, snow, or sleet (damage to a building or contents inside)
12. Accidental discharge or overflow of water/steam from plumbing, heating, AC, sprinkler, or a household appliance
13. Sudden and accidental tearing, cracking, burning, or bulging of a steam/hot-water heating, AC, or sprinkler system
14. Freezing of plumbing/heating/AC/sprinkler/appliance — covered only if the dwelling is occupied OR the insured used reasonable care to maintain heat or shut off and drain the system
15. Sudden and accidental damage from artificially generated electrical current (does NOT cover loss to tubes, transistors, or electronic components)
16. Volcanic eruption (one 72-hour event = one occurrence; does not include earthquake/tremor)

Open-Perils "Add-Back" Exclusions (HO-3 Dwelling, HO-5 Contents)

Because open perils covers everything not excluded, the form lists extra exclusions that would otherwise sneak in:

• Wear and tear, deterioration, mechanical breakdown, latent defect, inherent vice
• Smog, rust, mold/fungus, wet or dry rot (limited mold coverage by endorsement)
• Settling, cracking, shrinking, or bulging of foundations, walls, floors, roofs
• Birds, vermin, rodents, insects, and animals owned or kept by an insured
• Theft of property in a dwelling under construction
• Vandalism/glass breakage if the dwelling has been vacant more than 60 consecutive days

Standard Section I Exclusions (Every HO/DP Form)

Top trap: flood and earthquake are excluded on every standard HO and DP form. "The HO-3 dwelling is open perils, so it's covered" is a wrong answer when the cause is flood or earth movement — both are named exclusions that override the open-perils grant.

Concurrent Causation and Anti-Concurrent Language

When a loss has two causes — one covered, one excluded acting together — the ISO forms use an anti-concurrent causation clause: the loss is excluded if an excluded peril contributes "in any sequence," regardless of whether a covered peril also operated. The classic example is a hurricane that drives both wind (covered) and storm surge / flood (excluded). Damage attributable to surge is not covered even though wind contributed — which is exactly why coastal homeowners need separate NFIP coverage. Expect a question that pairs a covered and an excluded cause and asks what is paid.

Reading a Peril Question

Use this three-step method on every peril question:

1. Identify the coverage — is the damaged item the dwelling/other structures (open perils on HO-3/HO-5) or personal property (named perils on HO-3, open on HO-5)?
2. Identify the trigger — if named perils, does the cause appear on the 16-peril list? If open perils, jump to step 3.
3. Check exclusions — even open perils fails if the cause is an exclusion (flood, earth movement, wear and tear, intentional loss, vacancy over 60 days for vandalism/glass).

Applying this method, mold, rust, and gradual seepage lose because they are wear-and-tear/maintenance exclusions; a one-time sudden pipe burst wins as accidental discharge of water; slow leaking over weeks loses as the resulting deterioration is excluded. The exam consistently rewards the distinction between sudden and accidental (covered) and gradual/maintenance (excluded).