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

Property insurance policies that provide coverage exclusively for specific perils that are explicitly named in the policy are classified as being written on a named peril basis. This means that the insurer will only cover losses that arise from perils that are clearly defined in the terms of the policy, such as fire, theft, or vandalism.

This type of coverage offers a targeted approach, where policyholders are informed precisely what risks are covered and what are not. Consequently, if a loss occurs due to a peril that is not listed in the policy, the insurer will not provide coverage for that loss. This contrasts with an open perils basis, where coverage is much broader and covers all risks except those specifically excluded.

Understanding the distinction between named peril and open perils coverage is essential for both consumers and insurance professionals, as it guides decisions about policy selection based on individual risk tolerance and specific needs.