How does "named peril" coverage differ from "open peril" coverage?

Named peril coverage specifically protects against risks that are explicitly listed in the insurance policy. This means that if a peril is not mentioned in the policy, it is not covered, so policyholders must carefully review the list of covered perils to understand their protection level. This type of coverage tends to be more limited as it only applies to those specifically designated risks.

Open peril coverage, on the other hand, offers more comprehensive protection. It covers all risks of loss except for those that are specifically excluded in the policy. This approach provides broader coverage and generally gives policyholders a higher level of assurance, as it protects against a wider range of potential incidents without needing to worry about whether a specific risk is named.

In essence, saying that named peril covers specific risks while open peril covers all risks accurately captures the fundamental difference between the two coverage types. As a result, policyholders seeking more comprehensive protection might prefer open peril coverage, while those looking to save on premiums might opt for named peril, knowing the limitations involved.