How does an open peril policy differ from a named peril policy?

How does an open peril policy differ from a named peril policy?

• A. Covers only specific known risks
• B. Only covers losses due to theft
• C. Covers all perils unless excluded
• D. Does not provide any coverage at all

Answer: (C)

An open peril policy is designed to provide coverage for all risks except those specifically excluded in the policy. This essentially means that unless a particular peril is listed as one that is not covered, it is assumed to be included in the coverage. This type of policy offers broader protection compared to a named peril policy, which only covers risks that are explicitly listed in the policy document. In contrast, a named peril policy specifically outlines which perils are covered, leaving out any coverage for risks not mentioned. This makes an open peril policy generally more comprehensive, as it safeguards against a wider range of potential events that could cause loss or damage. The explicit exclusions in an open peril policy are critical to understanding which scenarios are not covered, but as a whole, the open peril approach provides a greater degree of security for the insured.

An open peril policy is designed to provide coverage for all risks except those specifically excluded in the policy. This essentially means that unless a particular peril is listed as one that is not covered, it is assumed to be included in the coverage. This type of policy offers broader protection compared to a named peril policy, which only covers risks that are explicitly listed in the policy document.

In contrast, a named peril policy specifically outlines which perils are covered, leaving out any coverage for risks not mentioned. This makes an open peril policy generally more comprehensive, as it safeguards against a wider range of potential events that could cause loss or damage. The explicit exclusions in an open peril policy are critical to understanding which scenarios are not covered, but as a whole, the open peril approach provides a greater degree of security for the insured.