What Does My Homeowner’s Insurance Actually Cover? (The Insurable Perils)

insurance agent denying homeowner coverage

You have seen recently on the TV a man sitting across the desk from an insurance agent describing how his dishwasher has quit working and he needs to file a claim against his homeowner policy for repairs. The villainous agent smuggly states, “Sorry, no coverage!” Exasperated, the client exclaims “Then what am I covered for?” The agent then begins to give him a list of perils which, had he was a victim of, would have been covered. So, what’s the deal?

To begin with, this client falls into the category of so many people buying insurance with no idea of the contractual provisions in the policy. They simply know they need something called a homeowner policy and normally go about purchasing it with the primary purpose of getting it as cheap as they can. Fewer things in my 42 years of selling insurance caused me more anxiety than when attempting to explain coverages provided by a homeowner policy and having the client exclaim, “Oh, you don’t need to explain all that to me. I’ll just forget it anyway. Besides, I know I can trust you to cover me for any of my losses. What will this cost me?”

As an agent I know the client in stating this was trying to compliment me on my knowledge and expressing his trust in me, but what it would really cost him is the information he needed prior to ever having to use the insurance. As an agent, I wanted my clients to be well informed so there would be no surprises when situations like that above would inevitably occur. “But I thought you said I would be covered” was usually the trump card a disgruntled client would use when a claim was denied. Insurance is not a panacea for everything which could damage your person or property.

You see, there are insurable perils and there are maintenance perils to be considered when discussing coverages available when purchasing a homeowner policy. A peril is an event that could cause damage to property, items, belongings of an insured, or to a person. The event would be considered to be serious and immediate danger, ranging from minor damage to total loss. It is also felt to be considered an insurable peril if it was sudden, accidental, and unexpected. Most homeowner policies being marketed now are categorized into one of four forms:

  1. Fire only. The only peril insured against under this form is fire. Any other peril would be outside the coverage provided. Probably the only time this would be used would be with an older building where the insurance company would not offer any other peril coverage due to the condition of the structure.
  2. Named perils 1-9. These perils would include fire or lightning, removal, windstorm or hail, explosion, riot or civil commotion, aircraft, vehicles, smoke, and vandalism or malicious mischief. On some occasions, the peril of breakage of glass or safety glazing would be included.
  3. Named perils 1-19 broad form. The policy contract itemizes 19 perils including the nine above within the policy language. Rounding out the 19 perils are theft, breakage of glass, weight of ice and snow or sleet, collapse, accidental discharge or overflow of water or steam, sudden or accidental tearing apart, cracking, burning, or bulging, falling objects, freezing of a plumbing, heating air conditioning, or automatic fire protection sprinkler system, or of a household appliance, sudden and accidental damage from artificially generated electrical current and volcanic eruption.
  4. Special form. The policy uses this type of language something like this: We insure for direct physical loss to the property insured, except for any loss excluded below (exclusions are then itemized). Under those exclusions any ensuing loss not excluded by any other policy provision is covered. We also cover under peril 27 any loss which would have been covered had peril 1 through 19 applied to your covered property. We do not cover under this peril any loss excluded under section 1 exclusions. (This above wording is found in policy contract offered by Idaho Farm Bureau Mutual Insurance p. 14)

It’s pretty obvious for comprehensive coverage a special form type policy would be preferable.

The perils I have mentioned as maintenance perils are generally the perils a homeowner policy excludes under the section of homeowner exclusions. These perils include but not limited to: Ordinance or law; earth movement, water damage, neglect, war, power, heating, or cooling failure, depreciation, decay, deterioration, change in temperature or humidity, loss of market, or from any other consequential or indirect loss of any kind, nuclear hazard, or weather conditions.

Look at your own homeowner policy to get a more detailed explanation of the above and other specific coverage limitations. You will find these to be very informative and it may keep you from sitting across the desk frustrated because the agent just said, “Sorry, no coverage!”

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