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Different home insurance providers refer to policies by different names, which can be confusing when deciding on coverage.
“Named perils” is a policy type you’ll encounter, particularly if you’re seeking a scaled back amount of coverage. It offers home insurance protection against perils specifically named in the policy. The list of perils can be as brief or as expansive as the insurance provider chooses.
Some providers also call named perils policies “standard” or “basic” policies. Occasionally, you’ll encounter named perils policies that are described as “specified perils” policies, though, technically they’re not synonymous.
Named perils policies are distinct from all perils policies, also known as “all-risk” or “comprehensive” policies.
Despite what the name “all perils” suggests, these policies protect a home and its contents against damage from all perils except those specifically excluded or listed as exclusions.
Named perils policies can be less expensive than all perils policies. However, in agreeing to less coverage, the policyholder assumes a greater risk of financial loss in the event of damage from an uninsured peril.
For example, a homeowner with a named perils policy that protects against damage from fire but not does not name wind damage will be compensated in the event of a fire but not for damage from a windstorm.
In other words, under a named perils policy, the home is only protected against perils that are explicitly named in the policy; any peril not written into the policy is not covered.
There are two main elements that distinguish a named perils policy:
On the other hand, those with an all perils policy must prove only that the loss or damage was to an insured property at an insured location.
It’s also possible that all perils coverage will apply to a portion of a home insurance policy, and that named perils coverage applies to another portion.
This type of policy, called broad, usually sees all risk coverage on a building and named perils on the contents.
An exclusion removes certain losses from the policy’s coverage.
Both named perils and all perils policies can have exclusions. Regardless of the policy type you have, common exclusions are:
Typically, there are three different home insurance policies you can choose from. Confusingly, each is often referred to by an alternate name.
The greatest advantage of a named perils policy is that you may pay less because you’re protected against fewer perils than you would be with an all perils policy.
If you’re looking for the absolute cheapest home insurance policy, consider a named perils policy. However, we recommend that if you do so, you carefully review your policy to understand what’s covered and what’s not.
It’s easy to customize your policy by other means. So, if you’re considering a named perils vs. all-risk policy, know that you can also reduce your insurance costs with a customized all risk policy.
The main difficulty you might encounter with a named policy is needing to make a claim for damage from a peril that isn’t named in your policy.
While you may pay less in premiums, you assume a greater risk by being covered for fewer perils than you would be with an all perils policy.
There are ways you can reduce your insurance costs, regardless of policy type. While comparison shopping is the crucial first step toward saving money, bundling policies, raising your deductible and updating a property to better respond to perils are also effective savings tactics.
It’s difficult to zero-in on the cost of any insurance policy because of how many variables go into determining cost.
In general, you’ll pay less for insurance that offers protection against fewer perils.
Put another way, a policy that covers more perils is likely to cost more than a policy than one that covers fewer perils.
You can reduce your overall insurance costs with the following tactics:
Yes. All home insurance policies offer personal liability protection, which covers the policyholder if you’re successfully sued following an insured loss.
Liability protection will cover ensuing medical and legal costs.
Content Manager
Katie Rook was a content manager at RATESDOTCA, specializing in home insurance. She has been a full-time reporter at CTV, National Post, and The Globe and Mail. Her work has also appeared in Dow Jones’ MarketWatch, Toronto Star, Toronto Life, Saint John Telegraph-Journal and VICE. Katie is a graduate of Ryerson and Dalhousie universities.
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