A named perils insurance policy is a home insurance (or business) insurance policy that only provides coverage on losses incurred to your property from hazards or events named on the policy. Named peril coverage may be purchased as a less expensive alternative to a comprehensive coverage or broad policies, which are policies that tend to offer coverage to most perils.
If a homeowner doesn't live in an earthquake and flooding prone area, they may elect to get a named perils insurance policy and only declare coverage against fire, theft, and hail, while leaving the earthquake and flooding coverage off the policy.
Keep in mind that all risks policy does not necessarily guarantee your property will be covered against all forms of perils.
It's thus a good idea for homeowners to check their broad coverage policies to make sure they do cover all the perils that they are concerned about. If the broad policy isn't sufficient, homeowners should buy a named peril policy to fill that hole in their coverage.
Insurance providers generally offer two types of property coverage for homeowners and businesses—named perils and all risks. "All risks" is a type of insurance coverage that automatically covers any risk that the contract does not explicitly omit.