Named Perils Insurance Policy

By
rjonesx
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What is ‘Named Perils Insurance Policy’

A home insurance policy that only provides coverage on losses incurred to your property from hazards or events named on the policy. Named peril policies may be purchased as a less expensive alternative to a comprehensive coverage or broad policies, which are policies that tend to offer coverage to most perils.

Explaining ‘Named Perils Insurance Policy’

Suppose a homeowner doesn’t live in an earthquake and flooding prone area, but is still concerned about fire, theft and hail damage. The homeowner may elect to get a named perils policy and only declare coverage against fire, theft and hail, while leaving the earthquake and flooding coverage off the policy.

Keep in mind that a broad coverage policy does not necessarily guarantee your property will be covered against all forms of perils. These policies contain conditions that cover what the insurer thinks are the most likely perils. Therefore it’s a good idea for homeowners to check their broad coverage policies to make sure they do cover all the perils that they are concerned about. If the broad policy isn’t sufficient, homeowners should buy a named peril policy to fill that hole in their coverage.

Named Perils Insurance Policy FAQ

What are the named perils in insurance?

A named perils insurance policy only covers damages to your property from events or risks named on the plan. Theft, fire, and natural disasters like hail, earthquakes, and flooding are events or hazards that may be declared on a named perils insurance policy.

What is the difference between a named perils policy and an open perils policy?

The named peril policy covers damages to covered property by the perils listed and “named” in the policy. The open peril policy on the other hand covers direct damage caused by all risk of physical loss to covered property. These policies also contain a list of exclusions that are not covered.

What is a covered peril in insurance?

In homeowners insurance, a “covered peril” is an event the insurance company agrees to reimburse in case you file a claim. Covered perils include fire, lightning strikes, windstorms and hail, weight of snow and ice, theft, and vandalism.

What are the named perils?

Usually, named perils policies cover loss or damage from these events: Fire or lightning. Windstorm or hail. Explosion. Riot or civil commotion. Aircraft. Vehicles. Smoke. Vandalism.

What is the difference between named perils and all risk?

Named perils coverage designates what’s covered but also has exclusions. All risks coverage assumes everything is covered, with the exception of the exclusions.

What are the 3 categories of perils?

Natural perils, human perils, and economic perils. Natural perils include such perils as injury and damage caused by natural elements such as rain, ice, snow, typhoon, hurricane, volcano, wave action, wind, earthquake, or flood.

Further Reading

  • Insurance and reinsurance contracts as complex derivatives: Application to multiple peril policies – papers.ssrn.com [PDF]
  • Agricultural insurance in developed countries: where have we been and where are we going? – academic.oup.com [PDF]
  • Protecting financial investment: agriculture insurance in Ghana – www.emerald.com [PDF]
  • Multiple-peril crop insurance: successes and challenges – www.emerald.com [PDF]
  • Repositioning of the insurance industry in the financial sector and its economic role – www.jstor.org [PDF]
  • Steps toward the establishment of a commercial aquaculture insurance program: lessons from an assessment of the Vietnamese pilot insurance program – www.tandfonline.com [PDF]

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