What is a "named perils" policy?

A "named perils" policy is defined as a policy that covers only the risks specifically listed in the policy. This means that the insured is protected against losses only due to the specific perils that are explicitly mentioned in the policy document. For example, if a named perils policy lists risks such as fire, theft, and vandalism, the insurer will only compensate the policyholder for losses resulting from these particular events.

This approach contrasts with broader policies, such as "all-risk" or "open perils" policies, which provide coverage for any loss except those specifically excluded. In the context of property insurance, understanding the differences between these types of coverage is crucial for ensuring that individuals and businesses have the necessary protection for their specific needs and risks.

Travel accidents, general coverage for any loss, and exclusions like fire and water damage do not accurately reflect the fundamental nature of a named perils policy. Therefore, the correct understanding of a named perils policy revolves around the limited scope of coverage strictly tied to the listed perils.