Texas General Lines — Property and CasualtyProperty and Casualty Insurance BasicsMedium
A client has a property insurance policy that covers damage from a list of specifically named perils, such as fire, lightning, and windstorm. If damage occurs due to a peril not on this list, the policy will not cover the loss. This type of coverage is known as:
- AOpen peril (All-risk) coverage
- BNamed peril coverage
- CBroad form coverage
- DSpecial form coverage
Show answer & explanationAnswer & explanation
Correct answer: B. Named peril coverage
Named peril coverage explicitly lists the perils for which the policy provides coverage. If a loss occurs due to a peril not on this list, it is not covered.
Why the other options are wrong
- A. Open peril (All-risk) coverage covers all perils except those specifically excluded.
- C. Broad form coverage is a type of named peril coverage that includes more perils than basic form.
- D. Special form coverage is synonymous with open peril or all-risk coverage.
Named Peril Coverage
An insurance policy that provides coverage only for losses caused by perils specifically listed in the policy.
- Burden of proof is on the insured to show loss by a named peril.
- Typically less expensive than open peril coverage.
- Common in basic dwelling policies.
Memory trick: Named is a LIST, Open is ALL BUT.