What defines a named peril policy?

A named peril policy is characterized by its specific coverage for certain risks, as detailed in the policy document. This means that the policy only provides protection against the perils that are explicitly listed. For instance, if a named peril policy covers fire, theft, and vandalism, it will only pay for damages arising from those specific events. Any peril not mentioned in the policy is not covered, which contrasts with an all-risk or open-peril policy that covers all risks except those explicitly excluded. By focusing on named perils, policyholders may benefit from clarity regarding what is and isn’t covered, allowing for better risk management and more tailored insurance solutions.