Open perils
Opens perils coverage refers to a type of property insurance that covers damage to your possessions from all causes except those your policy specifically excludes. It's sometimes referred to as all-risk coverage.
What is open perils coverage?
Open perils coverage is a form of commercial property insurance that provides protection against nearly every type of loss except those specifically excluded in the policy.
Open perils property insurance is different from named perils insurance, which only provides coverage for losses specifically listed in the policy. For example, a named perils policy might only cover damage from these perils or hazards:
- Fire
- Theft
- Vandalism
- Wind
Open perils coverage is also sometimes called all-perils insurance or all-risk coverage.
How open perils coverage works in real-world situations
Open perils coverage protects your business property against any cause of loss unless it’s specifically excluded in your policy. That means it often covers unexpected or unusual events that wouldn’t qualify under named perils insurance.
Here are a few common small business examples:
- A storm causes a tree branch to fall through your auto repair shop’s roof. This would likely be covered under open perils unless windstorm or falling objects are excluded.
- A delivery truck accidentally backs into your storefront and would be covered under open perils even though “vehicle impact” isn’t listed by name.
- A power surge damages expensive equipment in your IT consulting office, which would be covered unless electrical disturbances are excluded or limited.
These scenarios highlight why many small business owners choose open perils coverage—so you don’t have to predict every possible risk in advance.
What are some common exclusions listed in an open perils policy?
Some common exclusions in open perils policies include:
- Floods
- Mudslides
- Seepage and sewer backups
- Power failures
- Rust and corrosion
- Mechanical breakdowns
- Earthquakes
- Boiler explosions
- Employee theft
- Fungus damage
- Animal or insect pests
- Air or water pollution
What's the difference between open perils and named perils?
Simply put, named perils policies are cheaper but more restrictive. While open perils policies cost more, they reduce the chance of coverage gaps when something unexpected happens.
Take a closer look at the differences below:
| Feature | Named perils insurance | Open perils insurance |
|---|---|---|
What's covered | Only risks specifically listed | All risks except exclusions |
Burden of proof | You must prove the loss is covered | Insurer must prove it's excluded |
Coverage scope | More limited | Broader protection |
Typical cost | Lower premiums | Higher premiums |
Best for | Lower-risk properties | Businesses needing stronger protection |
Which type of property insurance is better: open perils or named perils?
Generally speaking, named perils policies are less expensive since they provide less extensive protection. However, if you’re confident the named perils (or hazards) will cover your major risks, then choosing a named perils policy may well be a wise choice.
If your business is more exposed to risk, and if you’re not sure of all the potential losses you might face, buying a more expensive open perils policy might be a better decision, even though it costs more.
A licensed Insureon agent can discuss options with you after you complete a free application to compare commercial property insurance quotes.
You’re responsible for providing proof with named perils policies
With open perils coverage, it’s up to your insurance company to prove that your loss was due to an excluded cause. If it can’t, it must pay for your claim.
However, with named perils policies, it’s up to you to prove that your loss resulted from one of its listed causes. If you can’t, you will have to pay for the damage yourself.
If you don’t want the burden of proof to fall on you, an open perils policy may be the easier option.
How can small businesses fill open perils coverage gaps?
Even though open perils insurance is broad, some common risks are almost always excluded and require extra coverage.
You may need endorsements or separate policies for:
- Flood damage
- Earthquakes
- Sewer backup or sump pump overflow
- Employee theft or dishonesty
- Wear and tear or gradual deterioration
Many of these risks can be covered by adding endorsements or purchasing standalone policies. Reviewing exclusions carefully helps ensure you don’t discover coverage gaps after a loss.
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Insureon helps you compare small business insurance quotes with one easy online application. Start an application today to protect yourself against the high costs of business property damage.
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