What is the primary distinction between named perils and open perils policies?

The primary distinction between named perils and open perils policies lies in the scope of coverage. In named perils policies, coverage is limited to specific risks that are explicitly listed in the policy. This means that if a peril is not mentioned in the list of covered perils, it is not insured.

On the other hand, open perils policies provide coverage for all risks except those that are specifically excluded. This approach offers broader protection, as it does not require the policyholder to match an incident to a specific listed peril, but rather assumes coverage unless a particular exclusion applies.

This understanding of coverage allows policyholders to make more informed decisions regarding the level of risk and financial protection they are willing to assume. By recognizing the difference in coverage scope, homeowners can choose a policy that aligns with their needs and risk tolerance.