---
title: the perils your policy leaves out
canonical_url: https://ensurance.app/guide/the-perils-your-policy-leaves-out
markdown_url: https://ensurance.app/guide/the-perils-your-policy-leaves-out.md
subtitle: "named perils, open perils, and the exclusions the land works on"
category: nature-finance
---

# the perils your policy leaves out

*named perils, open perils, and the exclusions the land works on*

A **named perils** policy pays only for the causes of loss it lists, and you must prove a listed peril caused the damage. An **open perils** policy pays for any cause it does not exclude, and the insurer must prove an exclusion applies. Open perils is broader, but its biggest exclusions, flood and earth movement, are two of the perils the land does the most to shape.

:::johnson
**open perils leaves out flood and earth movement.** On a standard homeowners policy, those are the exclusions where a floodplain, a slope and a forest can do the most work, and where no policy pays to keep that work going.

[see the wetlands that hold the water →](/inland-wetlands.ensurance?from=guide)
:::

![photo by Ries Bosch (@ries_bosch) on unsplash](https://images.unsplash.com/photo-1739714283675-cd7958ab9ac8?w=1200&fit=crop)

## named perils vs open perils, plainly

Every property policy first answers one question: which causes of loss does it pay for? There are two ways to write the answer.

**Named perils** lists them. Fire, lightning, windstorm, hail, theft, and so on. If the cause is on the list, the policy responds. If it is not, it does not. When you file a claim, you carry the burden of showing that a listed peril caused the loss. On a named perils policy, everything unlisted is left out.

**Open perils** (also sold as "all-risk" or "special form") flips the list. It covers any cause of direct physical loss that the policy does not exclude. When you file a claim, the insurer carries the burden of showing that an exclusion applies.

The two common US homeowners forms differ on your belongings:

| form | the house (dwelling) | your belongings (personal property) |
|---|---|---|
| HO-3 | Open perils | Named perils |
| HO-5 | Open perils | Open perils |

For the house itself, both are open perils. So the question that matters is not what is listed. It is what is excluded.

> Open perils coverage is defined mostly by its exclusions, so read them first.

## the exclusions are where the ground has most say

Standard homeowners forms exclude a short list of causes. The details vary by form and state, but three show up almost everywhere:

1. **Flood.** Rising water from a river, a creek, a storm, or rain the ground could not take in. Flood is bought separately, usually through the National Flood Insurance Program or a private flood policy.
2. **Earth movement.** Landslide, mudflow, subsidence and, in most forms, earthquake. Some of it has its own policy, and the rules differ by cause and form (mudflow caused by flooding, for example, can fall under flood coverage); much of it has none that most owners carry.
3. **Wear and tear, gradual deterioration.** Damage that builds slowly rather than arriving as an event.

Look at what sets each one.

| exclusion | what sets it | how much say the land has |
|---|---|---|
| Flood | Rain, plus where the water goes: soil that soaks it up or sheds it, a floodplain left open or filled, a wetland that stores it | Real for frequent floods, as a mechanism; it can lower and delay the largest, it does not stop them |
| Landslide, mudflow | Rain on a slope, plus what holds the slope: roots, cover, soil structure, whether fire burned it bare | Some, through vegetation and drainage, as a mechanism rather than a measured effect; a vegetated slope and a burned or stripped one can behave very differently in the same storm |
| Earthquake | Geology | Little. The land sets almost none of it |
| Wear and tear | The building, its age and its upkeep | Little. That belongs to the owner and the structure |

Two are mostly about the ground and two are not. Earthquake is geology, and wear and tear is the roof and the pipes; no forest or wetland changes them. The same goes for perils open perils does cover: hail, straight-line wind and freeze are weather, and the land sets little of them.

But flood and earth movement are where the condition of the place can do the most, and they are exactly what the standard policy leaves out.

> Two of the perils your policy leaves out are perils the land around you was already working on.

## floodplains and wetlands

A floodplain is the land a river uses when it rises. Left open, it spreads, slows and stores the water. Filled or paved, it sends that water downstream faster and higher. A wetland holds water that would otherwise reach a street.

The clearest measured case comes from Hurricane Sandy. Narayan and colleagues (2017) estimated that wetlands avoided about $625 million in direct flood damages during Hurricane Sandy. In Ocean County, New Jersey, salt marshes cut average annual flood losses by 16%. Sandy was a large storm, so that figure shows what marshes did in a big event, not that they stop one. River floodplains are less studied in loss terms. [Secondary perils are not secondary](/guide/secondary-perils-are-not-secondary?from=guide) walks through the peril-by-peril evidence.

None of that work shows up on a homeowners policy, because flood is not on it.

## slopes and forests

Earth movement starts on a slope. Roots bind soil, ground cover slows rain, and healthy soil takes water in rather than letting it sheet off. That is the mechanism. Strip the cover, by fire, grading or overgrazing, and the same rain can move the hillside.

Forests sit upslope of both. A forested watershed can slow the water that becomes a flood downstream. A forest that burns hot leaves a bare slope above homes, and the next heavy rain can send mud and debris through the neighborhood. The fire is usually a covered peril. The flood and the mudflow that follow are often excluded or sit on a different policy, depending on the cause and the form. [One hillside, many perils](/guide/one-hillside-many-perils?from=guide) follows that sequence, and [what a debris flow actually is](/guide/what-a-debris-flow-actually-is?from=guide) explains the mechanics.

## the uncovered part can grow

There is a second way a peril ends up uncovered: the policy is not available at all.

In California, State Farm General stopped taking new homeowners applications from May 27, 2023. Allstate had paused new California homeowners business in 2022. Owners who cannot find a policy in the regular market go to the California FAIR Plan, the state's insurer of last resort. It had 698,307 policies in force in September 2026, up 157% since September 2022, with $773 billion of exposure.

The US Senate Budget Committee's majority staff, in its December 2024 report *Next to Fall*, found that nonrenewal rates were highest and rising fastest in climate-exposed counties, using 2018–2023 data. The insurance industry disputed the report. Read it as one view of the data, not settled fact.

These are two separate gaps. Flood and earth movement were never in the standard policy. And in California, the regular market has become harder to get into. Where both stack, more of the loss sits on the owner with no policy behind it. Globally, the Swiss Re Institute counted about $220 billion in economic losses from natural catastrophes in 2025, and only about 49% of it was insured, so about half sat on no policy at all.

> When the policy shrinks or leaves, what is left between the owner and the loss is the condition of the place.

## what ensurance does with the excluded perils

Insurance is organized by peril. The land is not. One reconnected floodplain stores floodwater and, as a mechanism practitioners describe rather than a measured result, recharges groundwater for the dry months. One vegetated slope can work on landslide and on the sediment that fills a creek. That is why the place is the primary layer, the one that acts first, against several perils at once.

**[Ensurance](/manual/ensurance?from=guide)** funds that layer. It pays for the condition of a named place (the wetland, the slope, the forest) before the season, through a **certificate** on that place that anyone can look up on [specific](/specific?from=guide). Live agents already hold accounts for the systems that work on the excluded perils: [inland wetlands](/inland-wetlands.ensurance?from=guide), [erosion control](/erosion-control.ensurance?from=guide), [temperate forests](/temperate-forests.ensurance?from=guide).

What it does not do matters as much. Ensurance does not pay a flood claim, fill the exclusion, satisfy a lender who requires flood coverage, or stop the largest floods and slides. It does not lower a specific premium. Keep the homeowners policy, and buy flood coverage where you need it. [What ensurance cannot do](/guide/what-ensurance-cannot-do?from=guide) has the full list, and [ensurance vs insurance](/guide/ensurance-vs-insurance?from=guide) lays out how the two stack.

The policy pays after the perils it names or does not exclude. The land works before several of them, including some the policy leaves out. Fund the first layer; insure the rest.

## frequently asked questions

### what is the difference between named perils and open perils?

A named perils policy covers only the causes of loss it lists, and you must show a listed peril caused the damage. An open perils policy covers any cause not excluded, and the insurer must show an exclusion applies. Open perils is broader, but its exclusions still leave out flood and earth movement.

### does a standard homeowners policy cover flood?

No. A standard HO-3 or HO-5 covers the house on an open-perils basis but excludes flood. Flood coverage is bought separately, usually through the National Flood Insurance Program or a private flood insurer.

### can restoring wetlands or slopes replace flood or landslide insurance?

No. A kept floodplain, wetland or vegetated slope can make frequent floods smaller and may reduce slides, and it works before any policy does. It does not pay a claim, does not satisfy a lender, and does not stop the largest events. Fund the land and keep the coverage.

## next steps

- **On the land near water.** See what the live [inland wetlands](/inland-wetlands.ensurance?from=guide) agent holds, and whether the floodplain or wetland above you is on it.
- **On a slope.** Start with [erosion control](/erosion-control.ensurance?from=guide), the agent for the ground that holds hillsides in place.
- **Writing or backing policies.** See the [insurers page](/solutions/insurers?from=guide&topic=multi-peril).
- **Own land that does this work, or something else.** See the [landowners page](/solutions/landowners?from=guide&topic=multi-peril), or [write to us](/contact?from=guide&topic=multi-peril) and name the place.

## sources

Saylor Academy, *Risk Management for Enterprises and Individuals*, §13.1 — Named perils vs open perils, burden of proof, HO-3 and HO-5

Insurance Journal Academy (2017) — Homeowners forms and open-perils coverage

Narayan et al. (2017), *Scientific Reports* 7:9463 — Wetlands avoided about $625 million in direct flood damages in Hurricane Sandy; Ocean County, New Jersey, salt marshes cut average annual flood losses 16%

S&P Global — State Farm General stopped new California homeowners applications from May 27, 2023; Allstate paused new California homeowners business in 2022

California FAIR Plan, Key Statistics (2026) — 698,307 policies in force, September 2026; up 157% since September 2022; $773 billion exposure

US Senate Budget Committee majority staff, *Next to Fall* (December 2024) — Nonrenewal rates highest and rising fastest in climate-exposed counties (2018–2023 data); disputed by the insurance industry

Swiss Re Institute, *sigma* 1/2026 — 2025 economic losses from natural catastrophes about $220 billion, about 49% insured

---

## the series

1. [what multi-peril insurance covers, and what acts first](/guide/what-multi-peril-insurance-covers?from=guide) — **Read first:** the policy bundles the payouts; the land bundles the protection
2. [the soil under the crop policy](/guide/the-soil-under-the-crop-policy?from=guide) — Multi-peril crop insurance, and the ground that answers drought and downpour both
3. [the perils your policy leaves out](/guide/the-perils-your-policy-leaves-out?from=guide) — Named perils, open perils, and the exclusions the land works on
4. [one hillside, many perils](/guide/one-hillside-many-perils?from=guide) — Fire, then flood, then debris: hazards that arrive in a sequence the policy splits apart
5. [the first layer is the ground](/guide/the-first-layer-is-the-ground?from=guide) — Deductible, primary, excess, reinsurance, and the layer under all of them
6. [fund the primary layer, insure the rest](/guide/fund-the-primary-layer-insure-the-rest?from=guide) — How to pay for the condition that acts first, and keep the policy for what still arrives


**Companion series:** [risk has an address](/guide/risk-has-an-address?from=guide) — spatial risk: the pin, the footprint and the source, for an insurer's, a lender's or a town's whole book.