Alberta General Insurance Level 1 Practice Exam

A "named peril" policy specifically covers only those risks or perils that are explicitly outlined in the insurance contract. This means that if a loss occurs due to a peril that is not listed in the policy, the insurer will not provide coverage for that loss. Named peril policies offer a more limited form of coverage compared to "all-risk" or "open peril" policies, which encompass all risks except for those specifically excluded.

This type of insurance is beneficial for those who want to ensure they are covered for certain defined risks, providing clarity on what is protected. Examples of named perils might include fire, theft, vandalism, and certain types of natural disasters, depending on the terms of the policy.

In comparison to other types of policies, options like unspecified risks or all risks unless excluded do not accurately describe the limitations and specific nature of a named peril policy, thereby solidifying the understanding that the coverage is confined to the perils explicitly mentioned in the agreement.