What is meant by Named Peril in insurance?

What is meant by Named Peril in insurance?

• A. A coverage that includes all risks
• B. A specific cause of loss listed in a policy
• C. Property not covered under any circumstances
• D. A policy with open coverage

Answer: (B)

Named peril in insurance refers to a specific cause of loss that is explicitly listed in an insurance policy. This means that the policy will only cover damages or losses that are caused by the perils that are named within it. For example, if a policy outlines coverage for fire, theft, and vandalism, it will only respond to claims resulting from those specific incidents. This contrasts with other types of coverage, such as open peril policies, which provide protection against all risks except those specifically excluded in the policy. The specificity of named perils allows for clearer understanding of what is and is not covered, giving both the insurer and the insured clarity on the terms of the coverage. Thus, when a policy is referred to as having named perils, it helps policyholders know exactly what risks they are insured against.

Named peril in insurance refers to a specific cause of loss that is explicitly listed in an insurance policy. This means that the policy will only cover damages or losses that are caused by the perils that are named within it. For example, if a policy outlines coverage for fire, theft, and vandalism, it will only respond to claims resulting from those specific incidents.

This contrasts with other types of coverage, such as open peril policies, which provide protection against all risks except those specifically excluded in the policy. The specificity of named perils allows for clearer understanding of what is and is not covered, giving both the insurer and the insured clarity on the terms of the coverage. Thus, when a policy is referred to as having named perils, it helps policyholders know exactly what risks they are insured against.