Named, Specified, or All-Risk Perils: Which One Is Right for Your Business Insurance?

As an independent professional or business owner, you know the details matter when serving your customers. Knowing all the details helps you achieve goals and deliver what your customers want.

Similarly, when exploring options to protect your business and finances with liability insurance, it’s vital to know the details of a policy and what it provides to build comprehensive coverage that suits your business and services to safeguard your assets.

On that score, understanding the differences between named perils, specified perils, and all-risk perils coverage is crucial when choosing a business insurance policy. Let’s explore what each is and what they offer so you can make an informed decision:

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What Is a Peril in Commercial Insurance?

The Collins Dictionary defines peril as “an exposure to risk or harm; danger or jeopardy”. In the context of business insurance, a peril is a risk or event that may cause a business owner a financial loss or lead to a liability claim against them.

Perils can take many forms, such as:

• A customer has a slip-and-fall accident on a business’s premises that injures them
• A fire, natural disaster, or severe weather that damages a company’s property and inventory
• A cyber-attack or data breach that compromises a business’s data and computing systems
• A lawsuit brought against a business owner by a customer or third party
• An allegation of professional negligence or mistakes that cause a third party financial or physical harm
• Vandalism to business property, vehicles, or equipment
• Theft of a business owner’s tools, merchandise, or money

Business insurance policies include different types of perils to outline what a policy will cover. However, not all kinds of perils are covered. For instance, perils such as war or a nuclear disaster may be excluded from a policy (known as ‘exclusions’).

What Is Named Perils Coverage?

An insurance policy that features named perils coverage is one that covers only the risks listed in that policy.

A named perils policy is often considered a basic or standard policy and covers damages and losses caused by fire, theft, vandalism, natural disasters (like wildfire), and extreme weather (windstorms, hailstorms, ice storms). 

If a policyholder (in this case, an insured business owner) suffers a loss because of a peril not listed in their policy, the insurance company underwriting the policy will not cover that loss.

What Is Specified Perils Coverage?

A specified perils policy is a more customized version of a named perils policy. In this policy, the business owner chooses the specific perils they want covered.

It allows business owners to keep their premiums low by being selective about what they want their policy to include and exclude.

For example, in a commercial auto insurance policy, a business vehicle owner can include collision or upset coverage to pay for damages to their vehicle following a collision with another motorist or a stationary object (like a traffic light).

But they may skip adding comprehensive coverage to their auto policy, which covers damages caused by theft, vandalism, natural disasters, extreme weather, flying or falling objects, fire, or collisions with wildlife.

What Is All-Risk Perils Coverage?

That brings us to all-risk perils coverage. Also called an all-perils or open-perils policy, it covers all potential risks except those explicitly excluded.  

An all-risk perils insurance provides more protection than named or specified perils policies and is usually featured in commercial property insurance. Therefore, if a business owner with an all-risk perils commercial property policy should suffer damage because of a burst pipe or a hailstorm, it is likely to be covered by their insurer unless it was explicitly excluded.

Peril vs Loss: What’s the Difference?

A peril is not a loss. Rather, it is an event, incident, accident, risk, or factor that caused or contributed to a loss. 

A loss is the financial impact or damage an insured business owner suffers following an unexpected event or peril. For example, if a fire damages or destroys a commercial property, that’s a property loss caused by the fire (the peril). Or, if a customer or passerby slips and falls on a business owner’s property and is injured, that may result in a third-party liability loss because the business owner may be required to pay for the injured person’s medical expenses.

How to Get Customized Liability Insurance That Suits Your Business Risks

Zensurance can quickly provide the comprehensive business insurance you need and ensure it covers the perils that could upend your finances.

Protect what you’ve built and ensure your business continues to grow by filling out our online application for a free quote in minutes.

Our team of knowledgeable brokers will shop our network of over 50 insurers to find you the low-cost protection you need and tailor it to your requirements.