What does 'named peril' coverage specify?

'Named peril' coverage specifies that the insurance policy provides protection only against perils that are explicitly listed within the policy document. This means that if a peril is not included in the specified list, it is not covered by the policy. This form of coverage is essential for policyholders to understand, as it allows them to assess their risks based on the specific perils outlined.

For instance, if a homeowner has a named peril policy that lists fire, theft, and vandalism as covered events, they would only be compensated for those risks. If the property suffers damage from a peril not listed—such as an earthquake or flood—there would be no coverage for those losses. Therefore, named peril coverage offers a more selective approach to risk management compared to broader forms of coverage.

In contrast, the other choices describe different types of coverage. Coverage for all risks, except those specifically excluded, refers to an "all-risk" or "open peril" approach. Coverage for any risks that may occur implies a level of unspecified protection that does not align with named peril principles. Open coverage for the insured location suggests a broader scope of protection that is not restricted to named perils, which diminishes the precision that named peril policies offer.