Property & Casualty Insurance Exam (National Portion)Property and Casualty Insurance BasicsEasy
A property owner obtains an insurance policy that lists specific perils such as fire, lightning, and windstorm as covered events. Any damage caused by events not explicitly listed is not covered. This type of policy is known as a(n):
- ABroad Form policy
- BAll-Risk policy
- CNamed Peril policy
- DOpen Peril policy
Show answer & explanationAnswer & explanation
Correct answer: C. Named Peril policy
A Named Peril policy, also known as a 'specified peril' policy, only provides coverage for losses caused by the perils specifically listed in the policy. If a peril is not listed, it is not covered.
Why the other options are wrong
- A. Broad Form policies are often Named Peril policies with a longer list of named perils than a Basic Form.
- B. All-Risk is another term for Open Peril, covering all perils unless excluded.
- D. Open Peril (or All-Risk) policies cover all perils except those specifically excluded.
Named Peril Policy
An insurance policy that provides coverage only for losses caused by the specific perils or causes of loss explicitly listed in the policy. If a peril is not named, it is not covered.
- Only listed perils are covered
- Burden of proof on insured to show loss from named peril
- Less comprehensive than open peril policies
- Examples: fire, lightning, windstorm
Memory trick: NAMED means LISTED, OPEN means EXCLUDED.