2. Denial Related to Covered Perils
A common misconception is that homeowners insurance policies cover all types of damage that can occur to a home. This is certainly not the case. For example, most policies do not cover natural flooding. Remember that it’s possible to purchase a flood policy separately, or buy an add-on to a homeowners policy that covers natural floods.
Basic and Broad Perils
The typical policy will cover 11 named perils, or the most common types of damage that a structure is susceptible to. Things like lightning and fire are in the group of named perils that are covered on a basic policy. The definition of basic coverage is a policy that insures against losses from those 11 named types of damage.
When a policy adds five additional perils to the list of named perils, the coverage is called broad. Among the five additional risks to a home, in this type of coverage, is burst pipes. Many people who live in areas where temperatures dip below freezing suffer this kind of damage to their homes. If they have broad coverage, they are insured.
Among the main peril coverage in the insurance industry, the best type for homeowners is special. Under this kind of insurance, any destructive incident that occurs to a home is covered, unless it is specifically excluded by the policy.
In other words, special coverage protects homeowners, by default, against any bad thing that might happen to their home unless the event is specifically named in the policy as being an exclusion.
What’s the Most Common Type of Peril Coverage?
For most homes today, a typical policy will include special coverage for the structure of the home and broad coverage for the homeowner’s belongings. For all types of peril coverage, however, the insurance adjuster must be able to see that the damage occurred from an incident, and not from lack of upkeep or poor maintenance. Losses need to be sudden, like a lightning strike or fire, and must be the result of what insurance professionals call an occurrence.