PSI Property and Casualty Practice Exam 2025 - Free Property and Casualty Practice Questions and Study Guide

A "named peril" policy specifically covers only those risks that are explicitly listed within the policy. This means that the insured will receive protection only against those perils that are named in the policy document, such as fire, theft, or vandalism. If a peril is not included in that list, there is no coverage provided for it. This type of policy is well-defined and transparent, allowing policyholders to understand exactly what is and isn’t covered.

In contrast, a policy that covers all risks associated with a property would be considered an "open peril" or "all risk" policy, which provides a broader range of coverage. A policy that covers any risk not explicitly excluded is also aligned with the open peril definition and offers extensive coverage beyond just named perils. Lastly, a blanket coverage policy refers to a type of insurance that provides coverage across multiple properties or locations rather than being limited to named perils or specific risks. Thus, the named peril policy’s limited scope of coverage makes it distinctly different from these other types of coverage options.