What is the difference between "named perils" and "all risks" coverage?

Named perils coverage specifically refers to insurance policies that only cover the risks or perils that are explicitly listed in the policy. This means that if a loss occurs from a peril that is not mentioned, it will not be covered by the policy. For instance, a named perils policy might cover fire, theft, and vandalism, but if your property is damaged due to an earthquake, and earthquake is not listed as a covered peril, then the policy would not provide coverage.

In contrast, all risks coverage, also referred to as open perils, generally covers a broader range of risks. This type of coverage provides protection against all perils except those that are specifically excluded in the policy. Therefore, with all risks coverage, there is a wider scope of protection as it encompasses any damage or loss that arises from risks that are not explicitly excluded.

Understanding this distinction is crucial for policyholders when choosing the type of coverage that best meets their needs, as named perils offer more limited protection compared to all risks.