Named peril coverage is a type of insurance which only covers explicitly listed risks. There are various reasons to choose this type of coverage over or in addition to all-risks coverage or special coverage, and it is certainly an option to consider when purchasing insurance. Most insurance companies offer named peril coverage along with numerous other types of insurance, and consumers may want to ask for advice on the issue.
When a named peril coverage policy is written, the insurance company creates a list of “perils,” potential causes of damage or loss. These perils are clearly listed in the policy, along with a clause indicating that unlisted causes of damage will not be covered. For example, in a named peril policy which lists wind, rain, snow, and fire as potential perils, damage which is caused by an earthquake will not be covered. In areas where earthquakes are extremely rare, this insurance might be a good choice, since the consumer is only paying for likely causes of damage.
This type of coverage is the opposite of all-risks coverage, a type of insurance policy which will cover all potential sources of damage or injury. Because all-risks coverage is all encompassing, it tends to be much more expensive, but it does provide peace of mind, as consumers know that every eventuality is covered. In another type of coverage, special coverage, the insurance policy includes a clause indicating what types of damage they will not cover, in a reversal of named peril coverage.
In some cases, people supplement special coverage with named peril insurance. For example, a business might purchase a special coverage policy with riders which specifically exclude tornado damage, and then add a named peril policy which covers only tornadoes to fill the gap. Especially in areas which are prone to national disasters, named peril coverage can be a good choice because it specifically spells out potential sources of damage or loss, thus ensuring that they will be covered.
Whether you have all-risks coverage or named peril coverage, you should carefully document damage to insured vehicles, homes, and businesses. Keep a camera handy to track all damage, including its causes, as you may enter into a dispute with the insurance company over whether something is covered or not. This is especially true if you need to make emergency repairs which will partially conceal the damage like replacing a broken window, for example. You will want a clear record on file of the damage as it occurred. If you are visited by an official from the insurance company to inspect the damage, take note of the things the official observes, and you may want to consider photographing the official's work as well.
