By
Named Perils vs. Open Perils: What Does Your Home Policy Actually Cover?
Two policies can carry the same carrier name and the same price range and cover your house two different ways. One is a list. The other is everything the list does not exclude. Here is how to tell them apart, and the 400 dollar letter that taught a client the difference.
The answer
A named perils policy covers only the causes of damage printed in it. If the cause is not on the list, the claim is not covered. An open perils policy covers every cause of damage except the ones it excludes, so the exclusions page is the whole contract. Many Texas home policies cover the house one way and your belongings the other. Broad Form is a longer list, and it is still a list. Read the list, then read the exclusions, before you read the price.
Two ways to write a policy
-
Named perils
The policy prints the causes it covers, fire, lightning, windstorm, hail, and so on, and pays for those. Damage from anything not printed is yours. A Broad Form policy prints a longer list, and it is still a list.
-
Open perils
The policy covers every cause of damage except the ones it excludes, so the exclusions page is the contract. Flood is excluded on nearly every form, and so is water damage from continuous and repeated leakage or seepage. Open perils on the house is where I start for Houston, because the causes that surprise people are the ones nobody thought to list.
-
The house and your belongings are separate questions
A policy can cover the house on an open perils basis and your belongings on a named perils list. Many do. The line that decides it sits in the personal property section, and it is the line people skip.
The Texas forms, in TDI's own words
The Texas Department of Insurance keeps a plain table of the three traditional Texas forms, with its own one word verdict on each.
-
HO-A
- The house
- Named perils
- Your belongings
- Named perils
- TDI's word
- Basic
-
HO-B, the ISO HO-3 equivalent
- The house
- All perils unless excluded
- Your belongings
- Named perils
- TDI's word
- Broader
-
HO-C, the ISO HO-5 equivalent
- The house
- All perils unless excluded
- Your belongings
- All perils unless excluded
- TDI's word
- Broadest
From TDI's Texas Homeowners Policies overview, April 12, 2018. Carriers file their own forms today, and many still use these names. Your declarations page and the policy form number decide which one you hold.
The 400 dollar letter
A client of ours wanted a lower rate. We told him the policy he had was the right one for his family, and a lower number was not available for the way he wanted to be covered. Later he came back with a quote from another broker. Same carrier name on the page. About 400 dollars cheaper. He asked why we could not match it.
We laid the two side by side. The other broker had written him an HO-A, a named perils policy, and the change took coverage down across the board. The only visible difference was one letter in the form name. He had done nothing wrong. He was trying to do right by his family, and the letter did not tell him what it was taking away. We walked through his declarations page line by line, and he kept the policy he had. There is a big difference between skirt steak and filet mignon, and the menu does not always say which one you ordered.
Wind-driven rain, and the opening rule
Here is the rule that decides more Houston storm claims than any other. On most Texas forms, rain is covered only after wind or hail first makes an opening in the house. For the Texas windstorm policy, TDI puts it plainly, rain damage is not covered unless wind or hail first makes an opening in the walls or roof. Rain that blows in around a window that stayed shut can land on a different side of the contract than rain that follows a hole. The same TDI document describes an extension that covers wind-driven rain whether or not an opening is made, and some carriers write similar language into their own forms. Ask if yours does.
I learned this one from Ike. Ike made landfall near Galveston just after two in the morning on September 13, 2008, a category 2 storm with 110 mile per hour sustained winds, and I came into the industry in 2010 and 2011 while the contracts were still changing because of it. Driving Highway 3 through Clear Lake, you could look down a street and count the blue tarps. A lot of those tarps were the wind-driven rain conversation. Wind pushed rain into homes it would never have damaged otherwise, and it caused mold, questions, and problems. Some carriers rewrote their contracts to cover it. Others kept the older language, because the less they pay out, the more they keep. I watched carriers pull back from the Texas coast in those years, and I learned which kind of company I wanted to stand behind. The full Ike story gets its own page. For now, wind-driven rain or flood water covers the claim side.
What a cheap list looks like
Not long ago a new carrier came into Houston cheap. Let's face it, they were cheap, and we hoped they would give our clients a better option for the wallet. Then we read the form. Water damage was limited if the water heater sat above the first floor. Water damage was limited if the water heater was too old. We found one client, a one-story home, who felt the bargain fit him. The carrier asked him for about 120 photos, every room, every bathroom, every corner under the house, and then canceled the policy anyway.
We do not place families with carriers that work that way. We are here to write a policy that is there for you on your worst day. TDI's hurricane season reminder says to review your coverage before a storm, and the review starts with the list.
Your belongings are the other half
Picture a hurricane pushing rain through a window that stayed shut, onto the couch, the clothes, and the television. With open perils on the house and a named perils list on belongings, the house and the couch can get different answers in the same claim.
Then there is how belongings are valued. Replacement cost is what the car cost before you drove it off the lot. Actual cash value is what it was worth the moment the tires hit the street. We would rather give a family the choice. Some take the 400 dollar savings and keep the list, because the loss is less likely. Others want the peace of mind. Both are sound decisions, and as a brokerage we write either one. How to pick home insurance in Houston runs the five checks that catch this.
Before you sign
There are two ways to make money in insurance. Write the right risk for the right dollar with the right coverage, and pay the claims. Or cut coverage until the price is low and the client is happy to hold a sheet of paper.
We back the first kind every day of the week, because profitable carriers pay their claims.
Charles McDade, LUTCF
Questions readers ask
Is an HO-3 policy named perils or open perils?
Open perils on the house and named perils on belongings, on the standard form. TDI's table shows the Texas HO-B the same way. An HO-5, or the Texas HO-C, covers both on an open perils basis, and an HO-A covers both on a named list.
Does home insurance cover wind-driven rain in Texas?
On most forms, only when wind or hail first makes an opening in the roof or walls. Rain that blows in around a closed window or under flashing can fall outside the policy unless you carry an endorsement that covers wind-driven rain without an opening. Ask for the endorsement by name.
What does Broad Form mean on a home insurance quote?
A longer list of named perils. It covers more causes than a basic form and still covers only what is printed. If the quote says Broad Form on the house, you are being offered a list, and the price usually shows it.
How do I know which form I have?
The form number and name are on your declarations page, and the personal property section says whether belongings are covered on a list or on an open basis. Send us the page and we will read it with you.
Sources worth opening before you decide
- Texas Homeowners Policies, consumer overview, Texas Department of Insurance, April 12, 2018
- Proposed amendments to the Texas windstorm policy forms, rain damage and wind-driven rain, Texas Department of Insurance, 2005
- Insurance tips for hurricane season, Texas Department of Insurance, May 28, 2026
- Hurricane Ike, September 2008, National Weather Service Houston
The purpose is to help the reader ask better questions before claim time.
Know what your policy leaves out
The price is on page one. The list is on page twelve.
Send us the quote you are considering, or the policy you have. We find the form, read the list and the exclusions for the house and for your belongings, check the wind-driven rain language, and tell you what the lower price would leave out. We translate the insurance contract before claim time.
The audit is free. The decision is yours. No broker fees for personal lines clients.
