Why we won’t sell a Named Peril Policy

It’s not that we can’t, it’s just that we prefer not to so let’s talk about the two main reasons why.

Reason #1: There are two basic types of insurance policies you can purchase, one is the aforementioned Named Peril and the other is an All Risk policy.

Named Peril policies are dependent on a specified list of perils (risk of damage) to be included in the policy and only those risks listed are covered by the policy. Anything not specifically listed is excluded.

All Risk Policies are the exact opposite and cover everything unless it is specifically excluded. So, would you rather rely on a list of things to be included or know that everything is included unless it is specifically excluded?

Reason #2: Who has the responsibility of proving the cause of loss or damage?

With a Named Peril Policy, that responsibility lies with you, the insured. That’s right, you actually have to prove to the carrier that the damage to your home was caused by one of those perils listed in the policy. To be fair, in many cases, like hail, that proof is evident, but just about any other risk is not so cut and dry.

With a All Risk policy, since everything is covered unless it’s excluded, the carrier is the one that has the responsibility to prove if a claim is to be excluded due to that list. So where do you want to hedge your bets?

Does this mean that Named Peril policies should never be used? Well, our suggestion is to always prefer an All Risk policy as you have more coverage and better claims processing, but there are some rare occasions where the Named Peril policy could work.

Give us a call if you would like to discuss the differences in more detail or if you would like to talk to an advisor about all of your insurance needs.

Here are a few tidbits if you are bored:

-All Risk is often referred to as Open Risk or Open Peril. They are the same thing.

-Named Peril is also known as HO-A Policy

-HO-B, HO-3 or HO-5 introduce the All risk or Open Risk concepts.