If a policy covers only the perils that are specifically listed in the policy, which term best describes this coverage?

If a policy covers only the perils that are specifically listed in the policy, which term best describes this coverage?

• A. Named Perils
• B. Open Perils
• C. Hazard
• D. Peril

Answer: (A)

When coverage is limited to causes of loss that are specifically listed in the policy, the policy is described as named perils coverage. Only those named perils are covered, and a loss from any peril not listed would not be paid. This is in contrast to open perils (all-risk) coverage, which covers most risks unless they are excluded. A hazard is a condition that increases the chance of a loss, not a type of coverage. A peril is the actual cause of a loss, such as fire or theft, but the term being described here refers to how the coverage is written, not the cause itself. For example, if fire and theft are listed as covered perils, a loss from wind would not be covered under named perils unless wind is specifically named.

When coverage is limited to causes of loss that are specifically listed in the policy, the policy is described as named perils coverage. Only those named perils are covered, and a loss from any peril not listed would not be paid. This is in contrast to open perils (all-risk) coverage, which covers most risks unless they are excluded. A hazard is a condition that increases the chance of a loss, not a type of coverage. A peril is the actual cause of a loss, such as fire or theft, but the term being described here refers to how the coverage is written, not the cause itself. For example, if fire and theft are listed as covered perils, a loss from wind would not be covered under named perils unless wind is specifically named.