Open Perils
What Is Open Peril Coverage?
An open peril policy is coverage that can pay for claims arising from any peril, unless it is specifically excluded.
Think of it as your insurance company saying, “We’ll cover nearly everything, unless we say ‘no’ in writing.”
Key Takeaways:
- Open perils doesn’t truly cover “everything/anything” — exclusions still apply
- It’s common on special form property policies for buildings and contents
- The exclusions section is just as important as the “open perils” label
How Does Open Perils Coverage Work for Small Businesses?
With open perils coverage, your business is protected against loss or damage from any cause that isn’t specifically excluded in the policy.
Instead of listing everything that is covered, the policy focuses on what’s not covered. If the cause of loss isn’t on the “no” list, it’s generally treated as a covered cause of loss (subject to your policy details).
Common exclusions in an open perils policy often include things like:
- Normal wear and tear or gradual deterioration
- Rust, corrosion, or mold
- Mechanical breakdown of equipment
- Flood or earthquake (often requires separate coverage)
- Intentional damage caused by you or your employees
- Government action, war, or nuclear hazards
In most small business policies, open perils applies mainly to property coverage, such as:
- Your building (if you own it)
- Improvements you’ve made to a rented space
- Business property, like tools, equipment, furniture, and inventory
General liability coverage (for bodily injury or property damage you cause to others) is usually written differently and doesn’t use “open perils” wording in the same way.
Open Peril vs Named Peril Coverage: What’s the Difference?
Open perils and named perils are two different ways of describing what can trigger coverage on an insurance policy. Consider open perils as a buffet of coverage and named perils as a way of protecting against risks à la carte.
- Named perils: You’re only covered for the specific causes of loss listed in the policy
- Open perils: You’re covered for almost anything except causes of loss that are specifically excluded
Understanding the difference helps you compare quotes and decide whether broader protection is worth the extra cost for your business.
Open Perils vs Named Perils: A Quick Comparison
Swipe →
| Open Perils | Named Perils | |
|---|---|---|
|
What’s Covered? |
Any cause not specifically excluded |
Only causes of loss listed in the policy
|
|
How It’s Worded |
“We cover all risks except…”
|
“We only cover loss caused by…”
|
|
Coverage Breadth |
Generally broader protection |
Generally more limited protection |
|
Cost |
Often a higher premium |
Often a lower premium |
|
What You Must Review |
Exclusions and conditions section carefully |
List of perils and any special limitations |
Learn more about named perils.
When Is an Open Perils a Good Fit?
Open perils coverage may be a good fit for your business if:
- You have valuable equipment or inventory that would be expensive or difficult to replace quickly
- You worry about unusual or unexpected causes of damage, not just the obvious “big” risks
- You want a policy that can help with surprise situations that might not be listed in a named perils form
- You’re willing to pay a bit more in premiums now to reduce the chance of an unexpected “not covered” answer after a claim
- You’re growing and want your coverage to keep up with the complexity and value of your business property
In short, open perils coverage is ideal for small businesses that need a blanket of coverage for risks they’re aware of and those they haven’t even considered.
Additional Resources
- What you’ll find on a Certificate of Insurance (COI)
- What is an ACORD COI
- How to get a Certificate of Insurance
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