In a property insurance policy, what is "named peril" coverage?

Named peril coverage in a property insurance policy refers specifically to a type of insurance that only protects against risks that are explicitly enumerated within the policy document. This means that if an event or peril is not listed in the policy as covered, then it would not be protected under that insurance.

For instance, if a policy lists perils such as fire, theft, and vandalism, then those are the only situations in which the insurer would provide compensation for damages. If a different risk, like flooding or earthquake, occurs and is not listed, the insured would not receive coverage for damages resulting from that event.

In contrast, other types of coverage, such as open peril or all-risk coverage, would cover all risks unless they are specifically excluded. Hence, the distinction is crucial in understanding the scope of coverage provided by different insurance policies. This specificity in named peril coverage can provide budget-friendly options for policyholders who may only need coverage against particular risks.