Homeowners Insurance: Special Form vs. Named Peril

You should check your homeowners policy to make sure that your building and personal property is covered on a special form rather than a named peril basis.

  • Named peril means that the policy insures against the sources of loss (perils) that are listed in the policy such as fire, lightning, earthquake, explosion, riot, smoke, vandalism, or hail.
  • Special form coverage protects property against any source of loss that is not specifically excluded. Under named peril coverage, the policyholder may have to prove to the insurer that a loss was caused by a listed peril. With special form coverage, the insurer can only deny a claim if it can prove that the source of loss is excluded. Generally, a special form policy is preferable since it offers more coverage than a named peril policy.

Here are a few examples of losses where special form coverage made the difference and a claim was paid:

  • A battery was left on a hardwood floor. When the battery acid leaked out, it spread to the point that it was necessary to replace a large section of the floor.
  • An insured tipped over a bucket containing ammonia for soaking diapers. The solution ruined a room’s wall-to-wall carpet.
  • A deer jumped through a picture window. It went wild in the house, denting walls and furnishings and bleeding as it ran. It eventually jumped through another window.
  • A washing machine was running when its load of clothes became unbalanced. As the washer’s spin’s cycle began, it shook and “walked” from its position into a brand new water heater, poking a hole in the heater’s casing and breaking its glass liner.
  • An insured was walking on the floor joists of his unfinished attic. The insured slipped off of the joists and fell through the living room ceiling, causing extensive damage.
  • A two-year-old boy found a hammer and went on a spree through his parent’s house, seriously damaging several plaster walls, a toilet bowl, wash basin, dressing table and other items.
  • A bucket of paint was spilled on an insured’s hardwood floors, getting into floor cracks and pores. It was necessary to replace much of the wood.
  • Finally, an insured converted his oil furnace to gas without removing the home’s oil-input pipe. On its regularly scheduled day, an oil company tanker arrived and pumped 500 gallons of oil into the insured’s basement.