Named Perils vs. Open Perils (All-Risk): What's the Difference?
October 26, 2026 · PassReadyPro Team
"Is it covered?" is the question behind most claims, and the answer starts with how the policy defines what it covers. There are two basic approaches, and which one applies to which part of a policy is a favorite exam topic.
Quick answer: A named perils policy covers only the causes of loss it lists. An open perils (also called all-risk) policy covers any direct physical loss unless the policy excludes it. In a named perils policy you look for the peril on the list. In an open perils policy you look for an exclusion.
The definitions
The Texas Department of Insurance's home insurance shopping guide says named perils policies cover only events listed in the policy, and all-risk policies cover events the policy does not specifically exclude. The Utah Insurance Department describes named perils as specific events covered by a policy, such as fire, windstorm and theft.
The Maryland Insurance Administration adds the general picture for homeowners policies: they typically cover losses that are sudden and accidental and caused by specific perils such as fire, wind, hail and the weight of ice or snow, they usually exclude perils such as flood and earthquake, and they do not provide coverage for maintenance, so damage from wear and tear or deterioration generally is not paid.
How the standard forms line up
The NAIC's 2026 homeowners data call definitions describe the forms this way:
| Form | How the NAIC describes the coverage |
|---|---|
| HO-1 (Basic) | Named perils such as fire, lightning, windstorm and theft |
| HO-2 (Broad) | More named perils than HO-1, including falling objects and water damage from specific causes |
| HO-3 (Special) | All perils except those explicitly excluded, such as floods or earthquakes |
| HO-4 (Renter's) | Unscheduled personal property on a broad named perils basis |
| HO-5 (Comprehensive) | Open perils for both the dwelling and personal property |
| HO-7 (Mobile home) | Structure on an open perils basis, personal property on a named perils basis |
| DP-1 (Basic dwelling) | The dwelling against specific named perils like fire, lightning and windstorm |
| DP-2 (Broad dwelling) | DP-1 perils plus more named perils, such as falling objects, weight of snow and vandalism |
| DP-3 (Special dwelling) | "All-risks" coverage for the dwelling: all perils except those explicitly excluded |
The pattern to remember: the HO-5 is described as extending open perils to personal property as well as the dwelling, which is the usual difference between it and the HO-3. Forms vary by insurer and by state, so read the one in front of you.
Why it matters on a claim
- Under named perils, the first question is whether the cause of loss appears on the list.
- Under open perils, the first question is whether an exclusion, limitation or condition applies. Wear and tear, flood and earthquake are common exclusions, as the Maryland advisory notes.
- Under both, how the loss is valued is a separate question. See actual cash value vs. replacement cost.
A quick self-test
A pipe bursts and floods the kitchen. Under a named perils form you check whether the form lists that cause of loss (the NAIC notes that the HO-2 adds water damage from specific causes to the HO-1's list). Under an open perils form you look for an exclusion instead. The exact wording decides, which is why both exams and adjusters are trained to read the policy first.
Try it on real exam questions
Every state's exam is different, and the best way to learn these calculations is to practice them. Take 20 free practice questions for your state, scored instantly with explanations: Alabama, Alaska, Arizona, Delaware, District of Columbia, Hawaii, Idaho, Iowa, Kansas, Louisiana, Maine, Maryland, Massachusetts, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, Wyoming.
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Related reading
Frequently asked questions
What is the difference between named perils and open perils?+
A named perils policy covers only the events it lists. An open perils (all-risk) policy covers events the policy does not specifically exclude.
Is an HO-3 a named perils policy?+
The NAIC describes the HO-3 (Special Form) as covering all perils except those explicitly excluded. Check your own policy for how personal property is covered.
Does all-risk mean everything is covered?+
No. All-risk policies cover events they do not exclude, and exclusions such as flood, earthquake and wear and tear are common.
What is the difference between an HO-3 and an HO-5?+
The NAIC describes the HO-5 as providing open perils for both the dwelling and personal property, the usual difference from an HO-3.
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This article is for general informational purposes. Licensing requirements and exam details vary by state and change over time — always verify current details with your state's insurance department or exam administrator before relying on anything here.