4.3 Section I Perils Insured Against and Exclusions

The Broad Named-Peril List (16 perils)

HO-2 (building and contents) and the contents of HO-3 are covered against this list. If a cause is not on the list, there is no coverage.

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
13. Sudden and accidental tearing apart, cracking, burning, or bulging of a heating/AC/water-heating system
14. Freezing of plumbing, heating, AC
15. Sudden and accidental damage from artificially generated electrical current
16. Volcanic eruption

Memory aid: the first ten perils (fire through theft, plus glass) make up the basic group; perils 11-16 are the broad additions involving water, ice, freezing, and appliances.

Notice what is not on the broad list: there is no general "water damage," no flood, no earthquake, and no wear and tear. The water peril (#12) is narrow, it is sudden and accidental discharge or overflow from a system or appliance, not seepage, not flood, and not gradual leaking that occurs over weeks. The exam exploits this: a slow pipe leak that rots a wall cavity over months is not a sudden-and-accidental discharge, so even a broad-form claim is denied for the resulting deterioration.

Open Peril Still Has Limits

The HO-3 dwelling and all of HO-5 are open peril, but the forms still carve out specific causes inside Section I before the policy-wide exclusions even apply. Common building carve-outs:

• Collapse caused by wear, deterioration, rust, or settling (only specified collapse causes are covered).
• Freezing of plumbing in a vacant or unoccupied dwelling, unless the insured maintained heat or shut off and drained the water.
• Wear and tear, marring, deterioration, inherent vice, mechanical breakdown.
• Mold, wet/dry rot, smog, rust, and damage from birds, vermin, rodents, insects, or domestic animals.
• Theft from a dwelling under construction and theft of building materials before occupancy.

These are why even an open-peril claim can be denied without invoking the big Section I exclusions.

A practical consequence: "open peril" sells as if everything is covered, but the carve-outs plus the policy-wide exclusions reproduce most of the real-world gaps a named-peril buyer would face. The genuine advantage of open peril is the burden of proof on causes that are neither listed nor carved out, the mysterious or hard-to-classify loss, where the insurer, not the insured, must locate an exclusion.

The Section I Policy-Wide Exclusions

These apply to all HO forms. A common mnemonic is WONNIGEO-style grouping; learn each:

Ordinance or Law and Earthquake are each bought back by endorsement; Water Damage (flood) is never added to an HO form and needs a separate flood policy.

The Earthquake and Flood Gap

Both are excluded on every homeowners form. Earthquake is added back with the Earthquake endorsement (HO 04 54), typically with a percentage deductible (often 10-15% of the dwelling limit). Flood is never added by HO endorsement; the insured must buy a separate NFIP or private flood policy.

Anti-Concurrent Causation

The lead-in to the exclusions states that excluded losses are not covered regardless of any other cause or event contributing concurrently or in any sequence. So if a hurricane's wind (covered) and storm surge / flood (excluded) both damage a home, the flood portion stays excluded even though a covered peril acted at the same time. This is heavily tested after major-storm claim disputes.

Ensuing Loss and the Exception to the Exception

Many Section I exclusions contain an ensuing loss clause: although the originally excluded cause is not covered, a separate covered peril that follows is paid. Classic example: faulty construction is excluded, but if the faulty work causes a fire, the fire damage is covered because fire is a covered ensuing peril. The same logic explains why water seepage (excluded gradual damage) is denied while a sudden pipe burst that ensues may be covered. When a question buries an excluded cause that triggers a clearly covered consequence, look for the ensuing-loss path before answering "no coverage."

Intentional Loss and the Innocent Co-Insured

Section I excludes intentional loss — damage arranged or caused by an insured with the intent to cause a loss. Modern ISO language denies coverage to the culpable insured but many states protect an innocent co-insured (for example, a spouse who had no part in arson). The exam also expects the neglect exclusion (failure to use reasonable means to save and preserve property after a loss) and the governmental action exclusion (property seized or destroyed by order of civil authority, except destruction to stop a covered fire's spread).