Open Perils

Open perils is coverage for losses or damages to your stuff, and in the case of homeowners, your house – if something’s not specifically excluded, it’s covered.

What are open perils in insurance?

Let’s start from square one. A “peril” is something that’s covered under your insurance policy. As opposed to a hazard – something that makes the occurrence of a peril or loss more likely – a peril is something that causes, or can cause a loss.

For example, theft is a common peril – that means if your phone is stolen at a coffeeshop, your insurance will reimburse you for that (minus your deductible, of course).

“Open perils,” sometimes referred to as “all perils,” is a specific type of insurance coverage. It means that your insurance company will cover you for anything that happens to your stuff, unless it’s specifically excluded from your policy.

So if an apartment flood ruined your computer, and your policy doesn’t specifically say flooding isn’t covered, your insurance company will have to approve your claim, by default.

Named perils vs. open perils

These two often get confused and misused in insurance.

Named perils refer to a list of 16 bad things that may happen to your personal property that’d be covered by your insurer.

Open, or all perils, can refer to your personal property or home (dwelling, in insurance lingo) and only specify stuff that isn’t covered.

While most renters policies have coverage on the basis of named perils, most homeowners policies have a mix of both.

On HO3 policies (basic homeowners policies) it’s very common to see open perils coverage for your house and named perils coverage for the stuff you own. On HO5 policies (premium homeowners policies) you’ll see open perils coverage for both.

Just to note, most insurers will give you the ability to opt for coverage on the basis of open perils at an additional expense – more on that in the next section.

Should you get an open perils policy?

Whether you have an “open perils” or “named perils” policy depends on the type of insurance policy you purchase.

If you get an HO5 homeowners policy, which is basically the Rolls Royce of insurance policies, “open perils” is included on both property and dwelling coverage. As we mentioned before, if you get a more basic HO3 policy, you’ll be covered under “named perils” only.

So which policy should you get?

Well, it depends on your situation. Naturally, since ‘open perils’ policies provide more comprehensive coverage, you’ll have to pay the price for that extra piece of mind. It’s all about tradeoffs.

If you have a new home with a high value in a low-risk area, we suggest asking your insurer about an HO5 policy. It may have a price comparable to an HO3 policy. Otherwise, your basic HO3 policy should do the trick.

Pro tip: Don’t forget to double check the limits of liability in regard to “named perils” versus “open perils,” so you can understand exactly what you’re getting coverage for.

Please Note: These definitions don’t alter the terms, conditions, exclusions, or limitations of policies issued by Lemonade. They are intended for educational purposes only - they’re not meant to be used in lieu of professional legal or financial advice. We’ll do our best to keep them updated, but they may not always reflect current industry developments. Feel free to use the terms with attribution (friends don’t let friends plagiarize!)

Property and casualty insurance provided by Lemonade Insurance Company, 5 Crosby St., 3rd floor, New York, NY 10013. Life Insurance provided by North American Company for Life and Health Insurance®, Administrative Office, One Sammons Plaza, Sioux Falls, SD 57193.

Lemonade Insurance Agency, LLC (LIA) is acting as the agent of Lemonade Insurance Company and Lemonade Life Insurance Agency, LLC (LLIA) is acting as the agent of North American Company for Life and Health Insurance®. Both LIA and LLIA receive compensation based on the premiums for the insurance policies each sells. Further information is available upon request.

LLIA is a sub-producer of Bestow Agency, LLC. Life insurance quotes are provided by Bestow Agency, LLC dba Bestow Insurance Services in CA, who is the licensed agent. Term Life insurance policies are issued on North American Company for Life and Health Insurance® policy form LS181 and LS182, or state version including all applicable endorsements and riders. Products or issue ages may not be available in all jurisdictions. Limitations or restrictions may apply. Not available in New York. Our application asks about your lifestyle and health; your answers allow us to save you time and avoid offline medical exams.