Texas Adjuster Practice Test

Which of the following best defines the term "Named Peril"?

1. Insurance coverage for all types of damage

2. Coverage that applies only to hazards specifically listed in the policy

3. Unlimited coverage for personal property damages

4. A type of insurance more expensive than others

The correct answer is: Coverage that applies only to hazards specifically listed in the policy

The term "Named Peril" refers specifically to insurance coverage that applies only to those hazards that are explicitly listed in the policy. This means that if a peril or cause of loss is not mentioned in the policy, then coverage for that particular risk will not be provided. For example, if a policy lists fire, theft, and vandalism as covered perils but does not include flood, then damage due to flooding would not be covered. This is in contrast to "All Risks" coverage, which provides protection against all perils except those specifically excluded in the policy. Understanding this distinction is critical for adjusting claims and ensuring that policyholders receive the correct coverage based on the terms of their insurance policy.