Open Peril

Example

“Thanks to her open peril homeowners policy, Amanda's insurance covered the unusual damage caused by a sinkhole, even though sinkholes weren't specifically mentioned as a covered risk.”

Memory Tip

Remember 'Open Peril = Open Door Policy' - the door is open to cover everything unless specifically locked out by exclusions.

Why It Matters

Open peril coverage protects you against unexpected and unusual risks that you might not think to specifically request coverage for. This comprehensive approach can be crucial when facing novel or rare causes of loss that wouldn't be covered under a named peril policy, potentially saving you thousands in unexpected repair or replacement costs.

Common Misconception

People often think open peril means everything is covered without exception, but these policies still contain important exclusions like floods, earthquakes, and wear-and-tear. The key difference is that if a cause of loss isn't excluded, it's automatically covered, whereas named peril policies require the cause to be specifically listed as covered.

In Practice

Sarah has an open peril homeowners policy with standard exclusions. When a meteor fragment damages her roof (causing $12,000 in damage), her claim is covered because meteor damage isn't specifically excluded, even though it's not a commonly listed peril. Her neighbor with a named peril policy faces denial because meteor damage wasn't specifically listed as a covered cause of loss. Sarah pays only her $1,000 deductible while her neighbor pays the full $12,000 repair cost out of pocket.

Etymology

The term evolved from maritime insurance traditions where 'peril' meant danger or risk at sea. 'Open' indicates the coverage is open to all possibilities except those explicitly closed off by exclusions, representing a shift from restrictive to comprehensive coverage approaches.

Common Misspellings

Related Terms

More in insurance

Other insurance terms you should know

See Also