Rhode Island Insurance Adjuster Exam

An Open Perils Policy covers what type of losses?

1. Only specified perils

2. All losses unless specifically excluded

3. Acts of God

4. Only natural disasters

The correct answer is: All losses unless specifically excluded

An Open Perils Policy, also known as an All-Risks Policy, covers all losses unless specifically excluded in the policy wording. This means that a wide range of potential risks are covered, providing greater protection for the insured. It contrasts with Named Perils Policies, which only cover losses resulting from specifically listed perils. To elaborate, when a policyholder has an Open Perils Policy, they have the advantage of a broad coverage that includes various types of damages or losses, such as those resulting from theft, fire, vandalism, or even some natural disasters, unless those specific instances are explicitly stated as exclusions in the policy. This type of coverage is beneficial for individuals or businesses seeking comprehensive insurance protection, as it shifts the burden of proving that a loss is covered back to the insurer, rather than the insured needing to prove it falls under one of the named perils.