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When it comes to homeowners insurance, you have lots of choices to make, including the amount of coverage you want. On top of coverage limits, you’ll need to decide if you want an open perils policy or a named perils policy.
An open perils policy offers more protection, but depending on your situation, it may or may not be right for you.
Here’s what you need to know about open perils coverage:
What is open perils coverage?
Also known as all-risk coverage, an open perils policy covers damage to your home caused by any event, except those your home insurance policy specifically excludes. An open perils insurance policy will list everything that it won’t cover, so you know exactly what you can expect.
Let’s say a hailstorm hits your home and damages your roof. If you file a claim, an open perils policy will cover the damage as long as hailstorms aren’t listed as an exclusion in your contract. While an open perils policy offers comprehensive coverage, it’s more expensive than other policies.
Examples of perils
A peril is any event that has the potential to damage your home or belongings. A covered peril is one that your homeowners insurance policy will reimburse you for if you file a claim. Here are some examples of the most common perils:
Open perils policy vs. named perils policy
As previously mentioned, you can also choose a named perils policy for your homeowners insurance. A named perils policy is the opposite of an open perils policy in that it only covers perils that your insurance contract lists. If a peril isn’t listed, your insurance carrier won’t pay for the damage.
Here’s an overview of how these policies differ:
|Open perils policy||Named perils policy|
|Known as all-risk or special form insurance||Known as specified perils insurance|
|Every peril is covered unless it’s listed in the contract as an exclusion||Only perils that are listed in the contract are covered|
|Broader range of protection||Narrower range of protection|
|More expensive||Less expensive|
Which home insurance policies have open perils coverage?
Before purchasing home insurance, it’s important to understand which policies have open perils coverage and which ones have named perils coverage. For example, an HO-5, or comprehensive form policy, offers open perils coverage for both your home and personal property. If you want to maximize your coverage and don’t mind paying more for it, an HO-5 policy is worth considering.
On the other hand, an HO-1, or basic form policy, covers limited named perils for both your home and its contents. These policies are harder to find, but they’re less expensive than home insurance policies with more coverage.
Here are the eight forms of home insurance and their coverage levels:
|Policy form||Property type||What it covers||Best for|
|HO-1 (basic)||House||Limited named perils for structure and contents||Bare-bones coverage, where available|
|HO-2 (broad)||House||Greater number of named perils for structure and contents||More coverage than HO-1 but less than HO-3|
|HO-3 (special)||House||Open perils for structure, named perils for contents||Most homeowners|
|HO-4 (contents broad)||Rental unit||Named perils for contents||Renters|
|HO-5 (comprehensive)||Higher-value house||Open perils for structure and personal property||Homeowners who want the most comprehensive coverage|
|HO-6 (unit-owners)||Condo or co-op unit||Named perils for contents and certain structural items||Condo or co-op unit owners|
|HO-7 (mobile home)||Mobile home||Open perils for structure, named perils for personal property||Mobile home owners|
|HO-8 (modified coverage)||Old, high-risk homes||Limited named perils for structure and personal property||Homeowners who don’t qualify for any other coverage|
Should I get an open perils policy?
Your unique situation will dictate whether you should get an open perils policy. Here are some situations in which it might be a good choice.
You live in a disaster-prone area
Your home is at greater risk for damage if you live in an area with frequent hurricanes or hailstorms, for example. In this case, it might make sense to spend more money on an open perils policy.
You don’t mind paying extra for comprehensive coverage
An open perils policy can give you peace of mind, since it offers broader coverage than a named perils policy. If you have extra cash at your disposal, this comprehensive coverage may be worth it.
When open perils coverage may not make sense
Open perils coverage isn’t right for everyone. If you don’t foresee your property getting exposed to many threats in the future because you live in an area with mild weather conditions or low crime rates, for example, you may want to stick to a named perils policy.
In addition, if your home has old furniture and secondhand items, a less-expensive named perils policy might be your best bet. Finally, if an open perils policy is out of your budget, you may need to opt for a named perils policy.
How to get an open perils home insurance policy
If you decide that open perils coverage makes sense for you, follow these steps to buy a policy:
- Determine how much coverage you need. Ideally, you should get enough home insurance to replace your home in the event that it’s destroyed. To get an estimate of your home’s replacement cost, multiply the total square footage by local per-square-foot building costs. In addition, add up the costs of all your personal belongings to figure out how much personal property coverage you’ll need.
- Research insurance providers. Shop around and find several insurers who offer open perils coverage with competitive pricing and excellent customer service.
- Get free quotes. Once you narrow down your search to a few insurance carriers, get a free quote from each one. It’s a good idea to get at least three quotes.
- Choose an insurer. Next, choose the insurance provider that offers you the best deal and coverage for an open perils policy.
- Purchase your policy. Depending on the insurer, you can either purchase a policy over the phone or directly on the insurance carrier’s website.
Disclaimer: All insurance-related services are offered through Young Alfred.