In insurance terminology, what is a significant difference between named perils and all risk coverage policies?

The distinction between named perils and all risk coverage is fundamental in understanding insurance policies. All risk coverage is designed to provide a broad level of protection, covering any loss or damage unless it is specifically excluded within the policy. This means that as long as a peril or cause of loss is not stated as excluded, it is typically covered under all risk policies.

This approach contrasts with named perils policies, which only cover specific risks that are explicitly listed in the policy. For example, a named perils policy may stipulate coverage for fire, theft, and vandalism, but it would not cover damages due to other events unless they are included in its defined list of perils.

Thus, the correct answer highlights that all risk coverage operates under the presumption of inclusion unless exclusions are noted, making it a more expansive form of protection compared to named perils policies, which are limited to predefined risks. This understanding is key for individuals when assessing the adequacy of their coverage needs and determining which type of policy best suits their risk management strategies.