What does a "named perils" policy cover?

A "named perils" policy specifically covers only those risks that are explicitly listed in the policy document. This means that if an event or risk is not mentioned among those specified, it is not covered by the policy. Named perils policies are more limited in scope compared to all-risk or open peril policies, which cover all risks except those that are excluded.

An example of named perils might include coverage for fire, theft, or vandalism, with only these specific risks being insured. This type of policy structure requires policyholders to understand exactly what is covered and to ensure that any additional risks they are concerned about are included in the coverage.

In contrast, other types of policies that could be mentioned might cover broader risks (like all risks), not be limited to only future risks, or not be dependent on exclusions alone, which makes those options inaccurate in describing what a named perils policy entails. Understanding the limitations and specific coverage of named perils is crucial for anyone holding such a policy to avoid unexpected gaps in coverage.