Washington State Insurance Practice Exam

Which type of insurance specifically covers risks that are explicitly defined in the policy?

1. Unspecified risk insurance

2. Broad form insurance

3. Named peril coverage

4. General liability insurance

The correct answer is: Named peril coverage

Named peril coverage is designed to specifically cover risks that are explicitly listed in the insurance policy. This type of coverage only protects against the hazards or perils that are expressly mentioned, meaning that if a peril is not named in the policy, it will not be covered. For example, if a homeowner’s policy only lists fire and theft as covered perils, any loss due to flood or earthquake would not be covered because those risks were not explicitly defined. This approach provides a clear understanding for the policyholder about what risks they are insured against, making it important for individuals and businesses to carefully review the listed perils in their policies. Named peril coverage contrasts with broader types of coverage, such as all-risk or open peril coverage, which provides protection against all types of risks except those that are specifically excluded.