Legal Definitions - open-perils policy

An open-perils policy is a type of insurance coverage that protects against all causes of loss or damage to insured property, *except* for those causes that are specifically listed as exclusions in the policy document. This means that if a particular risk or event is not explicitly mentioned as being *uncovered*, it is generally considered to be covered. The burden is on the insurance company to prove that a loss resulted from an excluded peril. This contrasts with a "named-perils policy," which only covers losses caused by risks that are specifically listed in the policy.

• Example 1: Homeowner's Insurance

  A homeowner purchases an open-perils policy for their house. One day, a meteoroid fragment, about the size of a golf ball, falls from the sky and creates a small but damaging hole in their roof. The insurance policy does not list "damage from meteoroid fragments" as an exclusion.

  Explanation: Because the policy covers all perils unless specifically excluded, and damage from meteoroid fragments was not an exclusion, the homeowner's insurance would likely cover the repair costs. If it were a named-perils policy, the homeowner would only be covered if "falling objects" or "space debris" were explicitly listed as a covered peril.

• Example 2: Commercial Property Insurance

  A small business owns a warehouse filled with specialized electronics. Their commercial property insurance is an open-perils policy. During a period of unusually high humidity, a previously unknown type of fungus begins to grow rapidly within the warehouse, causing significant damage to the electronic components. The policy does not contain an exclusion for "fungus damage" or "unusual humidity-related damage."

  Explanation: Since the specific type of fungus damage was not listed as an exclusion in the open-perils policy, the business would likely be covered for the loss of its inventory. The insurance company would need to demonstrate that the damage was caused by an explicitly excluded peril to deny the claim.

• Example 3: Art Collection Insurance

  A private collector insures their valuable art collection with an open-perils policy. While being transported by a professional art handler, one of the paintings is accidentally scratched by a piece of equipment that unexpectedly malfunctioned. The policy does not have an exclusion for "damage due to equipment malfunction during transport."

  Explanation: The open-perils policy would cover the damage to the painting because the cause of the scratch (equipment malfunction) was not explicitly excluded. The policy broadly covers all risks of loss or damage during transport unless a specific exclusion applies.