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Insurance · Perils and Exclusions

What is the difference between a 'named perils' policy and an 'open perils' (all-risk) policy?

Reviewed by Jordan Morley, Editorial Lead at 247SimpleTests. Written by the 247SimpleTests Editorial Team from the official source material cited on every question.

Correct answer

A named perils policy covers only the perils specifically listed in the policy, while an open perils (all-risk) policy covers all causes of loss except those specifically excluded

  1. A A named perils policy covers only the perils specifically listed in the policy, while an open perils (all-risk) policy covers all causes of loss except those specifically excluded
  2. B Open perils excludes everything
  3. C Named perils covers everything
  4. D They cover identical risks

Why this is the answer

A named perils policy covers a loss only if it is caused by a peril that is specifically listed (named) in the policy — placing the burden on the insured to show the loss came from a covered peril. An open perils (also called all-risk or special form) policy covers loss from any cause except those specifically excluded — placing the burden on the insurer to show an exclusion applies. Open perils coverage is broader and generally more desirable, while named perils is more limited. For example, the HO-3 homeowners form typically provides open perils on the dwelling but named perils on personal property. This distinction is key perils-and-exclusions content.
Source: NAIC Model Outline, Named vs Open Perils

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About this topic: Perils and Exclusions

Perils and exclusions questions ask what a form covers and what it does not — fire, windstorm, theft, vandalism versus flood, earthquake, wear and tear, intentional loss — and the endorsements that buy back excluded perils. This is one of 9 Property Insurance questions on perils and exclusions, each with a full explanation on a single study page.

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