4.3 Section I Perils Insured Against and Exclusions
Key Takeaways
- The HO-2 broad form lists named perils; HO-3 applies open perils to the dwelling but named perils to personal property.
- Commonly tested named perils include fire, lightning, windstorm, hail, explosion, vehicles, smoke, vandalism, theft, and falling objects.
- Earth movement, flood, war, nuclear hazard, neglect, and ordinance or law are standard exclusions on every homeowners form.
- Flood is never covered by a homeowners policy; it requires the National Flood Insurance Program (NFIP) or a private flood policy.
- Exclusions are interpreted against the open-peril promise: on HO-3 dwelling losses, the insurer must prove an exclusion to deny a claim.
Perils Insured Against
A peril is the cause of loss. How a homeowners form treats perils depends on whether it is named peril or open peril.
- HO-2 applies named perils to both the dwelling and personal property.
- HO-3 applies open perils to Coverages A and B (the structures) but named perils to Coverage C (personal property).
- HO-5 applies open perils to all property.
This split on the HO-3 is one of the most frequently tested points: the building is broadly protected, but belongings are covered only for listed perils.
The Broad-Form Named Perils
When a loss must be caused by a listed peril, these are the standard HO-2/contents perils:
- Fire or lightning
- Windstorm or hail
- Explosion
- Riot or civil commotion
- Aircraft
- Vehicles
- Smoke
- Vandalism or malicious mischief
- Theft
- Falling objects
- Weight of ice, snow, or sleet
- Accidental discharge of water or steam (plumbing)
- Freezing of plumbing
- Sudden tearing/cracking of a heating system
- Electrical damage to appliances
- Volcanic eruption
A loss outside this list (on a named-peril form) is not covered.
Universal Section I Exclusions
Every homeowners form excludes the same core perils, regardless of form number:
| Exclusion | Why / note |
|---|---|
| Flood / surface water | Requires separate NFIP or private flood policy |
| Earth movement | Earthquake, landslide, sinkhole; needs endorsement |
| War | Including undeclared war and warlike acts |
| Nuclear hazard | Radiation, contamination |
| Ordinance or law | Cost to upgrade to current code |
| Neglect | Failure to protect property after loss |
| Intentional loss | Acts by an insured to cause damage |
| Power failure (off-premises) | Utility outage away from the residence |
These are sometimes remembered as the "WIN-PONG"-type list, but learn them by behavior, not mnemonic alone.
Flood vs. Water Damage Trap
A classic exam trap distinguishes flood from covered water damage:
- A burst interior pipe that floods the kitchen is a covered named peril (accidental discharge).
- Rising surface water entering from outside - a river overflow, storm surge, or backed-up surface runoff - is excluded flood, covered only by the National Flood Insurance Program (NFIP) or a private flood policy.
Sewer or drain backup is also excluded unless a water backup endorsement is added.
Anti-Concurrent Causation and the Ensuing-Loss Exception
Two doctrines decide many exclusion questions. The anti-concurrent causation clause states that an excluded peril is barred even if a covered peril contributes concurrently or in sequence — so if flood and wind both damage a home, the flood-caused portion is excluded regardless of the wind. This is why hurricane claims are litigated.
The ensuing-loss exception runs the other way: if an excluded event causes a separate covered peril, the resulting damage is covered. Classic example: faulty workmanship (excluded) causes a pipe to burst, and the ensuing water damage is covered even though the repair to the bad work is not.
How HO-3 Open Peril Actually Works on the Dwelling
On the HO-3/HO-5 dwelling (Coverages A and B), open-peril means all direct physical loss is covered unless excluded, and the insurer bears the burden of proving an exclusion. The dwelling-specific exclusions add: wear and tear, deterioration, mechanical breakdown, smog, rust, mold, wet/dry rot, settling/cracking, animals owned by the insured, birds/vermin/rodents/insects, and freezing of plumbing while the dwelling is vacant unless the insured used reasonable care or shut off and drained the system.
| Sublimit / special rule | Detail |
|---|---|
| Mold remediation | Capped (commonly $10,000) |
| Theft from a dwelling under construction | Excluded until occupied |
| Glass breakage in a vacant dwelling (>60 days) | Excluded |
Worked trap: a sewer backs up and ruins a finished basement. Standard homeowners forms exclude water that backs up through sewers or drains; coverage exists only if the Water Backup and Sump Overflow endorsement (HO 04 95) was added. Contrast with a burst supply pipe, which is a covered accidental discharge. Distinguishing surface flood (NFIP), sewer backup (endorsement), and interior pipe burst (covered) is one of the highest-yield property exam skills.
Scenario Drills: Naming the Outcome
Examiners present a loss and ask "covered or not, and why." Practice these:
| Scenario | HO-3 outcome | Reason |
|---|---|---|
| Wind blows off shingles; rain then ruins the ceiling | Covered | Windstorm is covered; ensuing water from the wind-created opening is covered |
| River overflows into the basement | Excluded | Surface flood — needs NFIP |
| Washing-machine hose bursts, floods laundry | Covered | Accidental discharge (covered peril) |
| Sewer backs up into finished basement | Excluded unless HO 04 95 added | Water backup is excluded by default |
| Slow, long-term plumbing leak causes rot | Excluded | Wear/tear, deterioration, and continuous seepage are excluded |
| Earthquake cracks the foundation | Excluded unless earthquake endorsement | Earth movement exclusion |
| Vandals break in and steal a TV | Covered (theft, named peril for Coverage C) | Theft is a listed contents peril |
Vacancy, Neglect, and Intentional Loss
Three insured-conduct exclusions decide otherwise-covered claims. Neglect denies losses the insured failed to mitigate after the event (not securing a damaged roof, so rain causes more harm). Intentional loss voids coverage for damage an insured deliberately causes — and the 2011 ISO language denies the innocent co-insured's share for an intentional act by any insured in many editions. Vacancy (commonly 60+ days) suspends certain perils (glass breakage, vandalism, freezing) because an empty dwelling is higher risk.
Exam trap — concurrent causation: if an excluded flood and a covered wind both contribute, the anti-concurrent-causation clause bars the flood-caused damage entirely; only the clearly wind-caused portion is paid. Pair this with the ensuing-loss rule (an excluded cause that triggers a separate covered peril, like faulty work leading to a covered fire) to answer the trickiest property questions correctly.
On an HO-3 special form, how are personal property (Coverage C) losses covered?
Heavy rain causes a nearby river to overflow, and water enters the insured's basement, ruining the furnace. Under an HO-3, this loss is: