Named Perils Policy vs Open Perils Policy (All-Risk Policy)


You have worked hard to start your business and find the perfect location, but what if an unexpected event was to occur that would cause damage to the dwelling and contents? There are a number of ways to plan for events such as fire, flood, vandalism, theft, windstorms, or natural disasters, but no way to avoid them completely. Aside from basic precautions, your building should also be protected by a perils insurance policy. When choosing an insurance policy to protect from unexpected events, you will need to choose between a named perils policy vs open perils policy.  There are some differences between them, and it’s important to be educated on these differences before making your final decision.


Named Perils Policy

The named perils policy is one that specifically names certain perils or natural disasters that may occur and will cover those only. Unlike an open perils policy that covers all perils, the named perils policy actually lists only certain events that are covered. This type of perils policy is best when you live in an area that is at risk for certain events or natural disasters, such living near the coast where hurricanes are common, or living in the Midwest and frequently experience tornadoes. If you know what perils you are most at risk for according to the physical location of your business, the named perils policy may be the one for you.


Open Perils Policy (All-Risk Policy)

An open perils policy, also called an all-risk policy, is different from the named perils policy as it covers all types of unexpected events, except those that are specifically excluded. Depending on the type of open perils policy you have, you may notice that earthquakes and/or floods are excluded. The open perils policy may be best if you want to cover a larger number of perils or if you don’t have specific dangers in your area of business, but want good insurance coverage just in case. For example, what is something very unexpected was to occur, such as a semi-truck crashing into the side of your building? This type of event is something you couldn’t have possibly expected, but if you had an open perils policy, the damages would have been covered. If you’re trying to decide between a named perils policy vs. open perils policy, and your business dwelling isn’t in a location where certain natural disasters are prevalent, then the open perils policy may be the right choice for you.


When comparing a named perils policy vs open perils policy, it’s important to take all of the considerations into account so that your business dwelling has the best protection available. In order to avoid out-of-pocket costs from unexpected events, your perils insurance policy needs to be researched and well thought out. Depending on your expected dangers, the location of your business, and personal preference, you can find a perils insurance policy that is right for you and your business.

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