A peril in insurance is something that affects you by causing a loss whereas a hazard will be a reason that a peril is more likely to affect you. They may seem the same, and while they are connected, they are different.
Peril insurance is a term that technically doesn’t exist, but is often used for searching for coverage, and to confuse things further, home insurance policies are often called hazard insurance policies by lenders.
We know…it’s a bit convoluted. That’s exactly why we’re here. We take pride in being a viable resource for your insurance questions as we do for all of our clients.
Understanding how your coverage works and the terms involved is critical. How else can you be sure that you are receiving the protection you deserve at an affordable price? Not to worry, Freedom Insurance Group has your back.
For our purposes, we’ll focus on the connection between the term “perils insurance” and home insurance policies, though perils can affect any sort of property. Nevertheless, the terms are typically connected to homes, therefore, that’s where we’ll dive in.
Perils vs. Hazards
Perils in insurance are the cause of your loss. An example would be a snowstorm or thunderstorm delivering rain, ice, or snow to your roof, causing water damage.
A hazard is a variable that makes a loss more likely. An example of a hazard would be the same loss as before, only occurring to a roof already in disrepair.
If your roof isn’t taken care of properly, you’ll be more vulnerable to such losses. Your home insurance carrier is also likely to deny the claim. This is why it’s important to realize that perils and hazards may often be used interchangeably, but are two different, important terms for homeowners to understand.
Now that we’ve gotten that distinction out of the way, it’s time to look at the different types of perils homeowners may face. We’ll get to the main concerns homeowners should look out for in a bit, and thankfully, most standard home insurance policies cover them. But first, let’s dive into the different terms to describe the actual perils.
A Covered Peril Explained
Covered perils are events that can cause a loss to your home but are covered by your home insurance policy. Common examples include theft, fire damage, hail damage, etc. Here, you’ll enjoy reimbursement for losses after filing a claim and paying your deductible.
Understanding Named Perils and Open Perils
Named perils are those specifically listed on your home insurance policy. With named perils coverage, your policy will only cover losses involving damage from what’s listed. This is a common coverage for the portion of your policy protecting your contents.
Also known as all risks coverage, a homeowners insurance policy with open perils coverage will protect your home against the peril unless it’s specifically excluded. It should be noted that this type of protection means higher premiums because it’s more coverage. Thankfully, this coverage is typical for your dwelling coverage, helping homeowners stay better protected.
As we can see, depending on which coverage you are relying on, you may receive different types of protection against perils. It’s also important to note that nothing is universal. Different homes may have different policies for any number of reasons.
These range from personal coverage choices to carrier options, and more. To best understand your homeowners insurance policy, speak with a licensed insurance agent that can help guide you through the specific ins and outs of your coverage. For more information, you can compare named perils vs. open perils further on our sister piece, which dives deeper on the subject.
Which Part of a Property Insurance Policy Describes the Perils?
The insuring agreement summarizes the commitments and coverage offered by your home insurance carrier. This is the contract between your insurer and you as the homeowner that defines what the insurer agrees to do. Common examples include paying the insured’s losses, providing certain services, or defending the insured against lawsuits.
What Are the 16 Named Perils in Insurance?
For a named perils policy, you may have heard there are sixteen types of perils your home insurance will protect against. Here’s what Texans can expect to find protection from:
- Fire and Smoke Damage
Dealing with a fire is one of the harshest losses a homeowner can face. They are emotionally charged situations, destructive, and costly. Even property that isn’t destroyed by the actual fire can suffer from smoke damage. This remains the costliest claim homeowners in Texas face each year. Thankfully, a standard home insurance policy will help you reimburse such expenses.
- Lightning Damage
A home policy also covers lightning damage. This can also cover you from power surges protecting your home and electronics that can be destroyed during storms.
- Windstorm Damage
You don’t have to look far to find threats involving wind damage. There are tornadoes, severe thunderstorms, and tropical storms that threaten Texans. Nevertheless, if you have a home insurance policy, you’ll be covered.
- Hail Damage
The Lone Star State has more hail than any other state in the country. It’s a good thing that homeowners are protected from this threat. Your home insurance policy is there to help you restore damage suffered due to hailstorms that pass through.
Explosions of any kind are dangerous and present a threat to the health of those in your home as well as your property. While you won’t find reimbursement for your medical bills, property damage is covered from such perils by a home policy.
- Glass Breakage
Window repair might not be the harshest loss a homeowner will face, but it doesn’t mean it’s any less annoying. Reimbursement is available for those looking to restore their homes after suffering glass breakage.
- Riots or Civil Commotion
Homeowners faced with riots and civil disruption can often feel they are in a lose-lose situation. The damage can be severe and swift when dealing with such events, and while it may be a pain to get through, you can receive reimbursement to help restore your property in the aftermath.
- Vandalism and Malicious Mischief
When experiencing a break-in, it’s often considered what will be stolen. But there are some instances in which nothing actually is, yet damage still persists. Furthermore, thieves are still going to likely ransack your home as they quickly look for goods before exiting. Either way, your policy will protect you.
Your home insurance coverage can help you restore lost and damage property. This includes damage to your home, stolen items, damaged personal property, and more. But while you do receive protection, there are policy limits for such perils. You’ll need to increase these limits and pay a higher premium if you have sizable value in some possessions. There are also insurance riders available.
- Falling Objects
Homeowners can cover the costs of falling object damage to their homes. This includes everything from a meteor from the cosmos to a fallen tree during a storm. Either way, you’ll have coverage for your home with the right policy.
- Damage Caused by an Aircraft
It’s not every day that airplanes crash into homes, but it does still happen. Even in a less dramatic fashion, the event is a bit unique and can be costly to repair. A standard homeowners insurance policy will reimburse you for such losses.
- Vehicles Causing Damage
Vehicles crashing into a home is more common than such incidents with aircraft, and thankfully, they are also covered. You’ll need to stay protected from extreme crashes at high speeds, smaller incidents caused by a driver that simply made a small human error, and everything in between.
- Weight of Ice, Snow, or Sleet
As snow, ice, or sleet adds up, the weight can cause severe damage to your home by caving in your roof. Such damage is covered by your policy to your home and even personal property.
- Damage Caused by the Freezing of Plumbing and Heating
Texans learned the hard way through Winter Storm 2021 just how much damage can be caused after a harsh freezing event. The mess is a lot to clean up, but you can still receive reimbursement for such losses to help restore them.
- Freezing and Thawing Causing Water Damage Under Roofing
The freeze-thaw cycle can deliver water damage to your roof and even inside your attic. You’re going to need to make sure your roof is in good condition and that the damage isn’t caused because of wear and tear. But if it’s accidental and sudden from such a weather event, you’ll find reimbursement from your home policy.
- Water or Steam Damage
For flood damage, you’re going to need flood insurance, but when other forms of water damage are sudden and accidental, homeowners receive coverage. Just like flooding, you can’t include general wear and tear, but things such as damage from a burst pipe can receive reimbursement for such losses.
Because your home insurance policy is made up of several different coverages, a standard policy will also provide protection against liability losses for your household. While no policy is blanket coverage, a home insurance policy is the best foundation of protection available to homeowners.
Are All Perils Included in Homeowners Insurance Policies?
Typically, no, you’re going to have exclusions for your homeowners insurance policy when dealing with a standard policy. Here are some common perils which you won’t find coverage for unless you add it through various means including additional policies or insurance riders:
- Damage intentionally caused to your home
- General wear and tear leading to a loss
What Does All Other Perils Mean in Home Insurance?
All other perils is yet another way to speak about open perils. Remember, with open perils coverage, you’re protected against any perils that aren’t specifically excluded, but such protection comes at a higher price.
Additional Protections and Considerations for Texas Homeowners
Home insurance continues to be the best way for any homeowner to protect their home, however, there are many scenarios in which more than this coverage alone is needed
Specifically, Texans are at an increased risk due to various factors including weather patterns, a high population, and an aging infrastructure. But many affordable options are available to keep you protected without breaking the bank.
Your insurance policies should work to protect your household from facing a major financial loss at an affordable price. There’s no point in overpaying for coverage you don’t need or policies that should save you money but cost you more.
By understanding your risks and the perils your home may face, you can determine which protections are right for you and build personalized coverage for your needs. Here are some important considerations and ways Texans can protect themselves, beyond a standard home insurance policy (HO-3):
The risk of flooding anywhere in the United States continues to grow, but in Texas, it’s even more imperative to pay attention. These trends are due to a variety of reasons including construction, changing weather patterns, and the natural prone tendency of flooding in Texas.
Such threats are higher in some areas than others, but considering that one in four flood insurance claims come from homes outside of flood zones, the risk of flooding is a universal concern.
But your home insurance policy won’t protect you from flood damage. Such perils will need a separate policy to avoid sustaining such losses. Sure, there are times that accidental water damage that is sudden in nature is covered, but flooding from outside of your home entering your home doesn’t qualify.
Your homeowners coverage protects against liability, but there are policy limits that will apply. In order to gain more coverage for larger concerns, umbrella insurance is a supplemental policy that can help.
This is important, especially for homeowners with considerable financial assets. If you are involved in a lawsuit, your personal possessions and finances can become at risk without such coverage. A minimal umbrella insurance policy will only cost a few hundred dollars per year, while delivering $1 million in protection.
An HO-5 Policy
Homeowners insurance comes in many different forms. A standard home insurance policy is the most common version, however, if you require more coverage, an HO-5 policy may suffice.
Written on an open-perils basis, an HO-5 policy is going to have higher premiums, but unless it’s explicitly excluded in your policy, you’ll be covered. A common exception remains flood coverage, and it’s important to note that the more protection you require, the higher your rates will be.
Insurance peril categories can come in many shapes and forms. As we can see, not all of them are covered by a home insurance policy. Thankfully, there are insurance riders (endorsements) that can be added to policies for even more protection. Here are common examples:
- Extended Replacement Cost Coverage
- Identity Theft Coverage
- Mold Remediation Coverage
- Personal Injury Coverage
- Scheduled Personal Property Coverage
- Sinkhole Coverage
- Sump Pump/Sewer Backup Coverage
- Utility Line Coverage
Depending on the risks present to your home and your risk tolerance, these additions to your standard home insurance policy can provide affordable solutions to otherwise costly perils.
Working from home continues to be a trend throughout the Lone Star State, and this means you may be left exposed to certain perils not covered by a standard home insurance policy. Additional losses can come in many forms when running a business or working from home, such as:
- Loss of officer/business materials.
- Potential liabilities due to visitors from customers, partners, or vendors.
Overall, depending on your operation and risk tolerance, additional policies may be necessary to protect you from financial losses. Note: home business endorsements may be available, but do not protect against losses involving liability.
How To Protect Your Home From Perils With Affordable Insurance in Texas
All homeowners in Texas need a home insurance policy, but the coverage you need to stay protected from perils will vary. This is where we can help. At Freedom Insurance Group, we’ve been helping Texans since 2005, stay covered without having to overpay. We save our clients an average of 40% on their premiums when they switch.
Every home has its own set of risks. This means that the coverage you need will also vary from those of another homeowner. But due to its ability to cover a wide range of common threats, a homeowners insurance policy is the foundation you’ll want to base your protection around.
There are other policies available such as flood insurance or umbrella coverage that can also help you stay protected against more. Not to mention insurance riders that also have their place for protecting against specific threats.
The best thing any homeowner can do is to assess the risks at hand for their homes and speak with a licensed insurance agent to help protect against them. By doing so, you can stay protected to avoid major financial losses. The right agent will also help you save in the process.
Our team works with 25+ insurance companies that are all among the top-rated carriers in the state. This allows us to shop your coverage among various brands that are trustworthy and identify the best coverage option for your needs.
In addition to comparing your coverage to pinpoint the best rate on the market, partnering with so many carriers also helps you gain access to more insurance products. A peril in insurance is a threat to your finances, don’t leave yourself exposed to potential loss. Contact us today or fill out a form for a free homeowners insurance quote online.