Mississippi Property & Casualty Practice Exam 2025 – Comprehensive Prep Guide

The distinction between "named perils" and "open perils" coverage centers around the scope of risks that each type of policy covers. With named perils coverage, the policy specifically lists the risks that are covered, meaning that if a peril is not explicitly mentioned in the policy, then it is not included in the coverage. This can provide a more straightforward understanding of what is and isn't covered, but it can also lead to gaps in protection if potential risks are overlooked in the listing.

In contrast, open perils coverage, also referred to as all-risk coverage, generally protects against all risks except for those that are specifically excluded in the policy documentation. This provides a broader level of protection, encompassing more risks without the need for them to be explicitly named. The key here is that the burden of proof to establish a covered loss lies with the insurer; they must demonstrate that a specific risk is excluded.

While other options may address different aspects of coverage or costs, they do not accurately capture the fundamental difference between named perils and open perils. Recognizing this distinction is crucial for property and casualty insurance understanding, allowing individuals to select the policy that best meets their risk management needs.