Question

(a) List the six coverages provided in the Homeowner's 3 policy.

(b) Describe the difference between "named perils" and "open perils" coverage basis.

Answer 1

(a) Homeowner's policy 3 is a single policy which includes various coverages, the six coverages provided includes:

• Dwelling
• Other Structures
• Personal Property
• Loss of use
• Debris removal (under additional coverage)
• Reasonable repair (under additional coverage)

(b) "Peril" is the term used by insurance industry so as to ascertain what has been insured against within the policy, The 'open perils' coverage means insurance coverage is being provided by the insurance company for any reason, not specifically excluded. For example, it may be written in the policy that all risk of direct loss may be covered, such coverage is regarded as open peril. While under 'named perils', the loss that will be covered by the insurance company will be specifically laid down, for example, it may be laid down in the policy that "Direct loss to the property by the following perils will be covered: Riot, explosion etc.", such kind of coverage is regarded as 'Named perils' coverage.