What distinguishes named peril insurance from all-risk insurance policies?

Named peril insurance is characterized by its coverage of only specific risks clearly identified in the policy. This means that policyholders can expect coverage only for those perils that have been explicitly stated, such as fire, theft, or vandalism. If a peril is not mentioned in the policy, it is not covered.

In contrast, all-risk insurance, also known as open perils or comprehensive coverage, offers a broader scope. It typically covers any risk that is not specifically excluded in the policy. This means that unless a peril is excluded in the terms of the policy, it is included. As a result, all-risk policies provide more extensive protection and are preferred by individuals looking for comprehensive coverage.

Recognizing these definitions helps clarify the functional differences between the two insurance types. The distinction lies in the breadth of coverage and how the risks are presented in the policy terms.