Open Perils, All Risk, Special Perils, Named Perils

Question from a client:


I hate to bother you with this.   I know this isn’t part of our current engagement for the insurance renewal, but do you have any opinion on this?  A prior agent had recommended that for commercial loan insurance requirements – we should require our borrowers to have either “Special Form Coverage” or an “Open Perils” policy.  I believe that the reason for this was that these two policies would outline any exclusions – whereas, if we just had a “standard” hazard policy – we wouldn’t know if there were any exclusions until we had a claim.  Is this accurate?

Apparently, some of the agents that our customers are dealing with don’t understand this (if I am accurate) or state they don’t offer these types of policies or endorsements.

Can you please give me some guidance on this?  If you would rather not, I understand.

My Reply:

Of course I’ll help!
“Special perils” is a very common term and should be familiar to any agent.  “Open perils” is what is causing confusion I would say.  It is a largely antiquated synonym to special perils.  The old-timers also call special perils, “all risk.”
They all mean an insurance policy where the perils (insured events) are anything that happens to the building except that which is excluded.
So, a special perils policy covers anything that damages the building except war, nuclear events, intentional damage by the insured, insects, vermin, flood, earthquake…
Contrast the above with a “named perils” policy where the perils insured are specifically listed: fire, lightning, windstorm, hail, vehicles, explosion, aircraft, vandalism…
That help?