What distinguishes a 'Named Peril' policy from an 'Open Peril' policy?

A 'Named Peril' policy is specifically designed to cover only the risks explicitly listed in the policy. This means that if a peril is not named in the policy, it will not be covered. For example, if the policy states that it covers risks such as fire, theft, and vandalism, it will only provide protection if one of these specified events occurs.

In contrast, an 'Open Peril' policy, also known as an 'All Risks' policy, provides coverage for all perils except those specifically excluded. This type of policy is broader in scope, meaning it offers protection against a wider range of risks and only excludes certain events that the insurer does not wish to cover.

Understanding this distinction is crucial for policyholders when choosing the type of insurance that best fits their needs, as it affects the extent of coverage and potential out-of-pocket expenses for risks not included in the policy.