South Carolina Personal Lines Practice Exam

What type of policy covers all causes of loss except for those specifically excluded?

1. Named peril form

2. Open/special peril form

3. All risk policy

4. Broad form policy

The correct answer is: Open/special peril form

The policy that covers all causes of loss except for those specifically excluded is known as an open or special peril form. This type of policy is comprehensive in nature, providing coverage for various risks beyond those explicitly listed in the policy. It essentially guarantees protection against a wide range of potential losses, allowing only for exclusions listed in the policy documentation. For example, if an open peril policy specifies that certain types of damage, such as wear and tear or intentional acts, are not covered, then all other risks not mentioned are protected. This type of coverage is particularly beneficial for individuals seeking a broader safety net against unforeseen events, as it inherently offers a higher level of protection compared to policies that list only the specific perils covered. Other types of policies, such as named peril forms, focus only on the risks that are explicitly named in the contract, while a broad form policy may cover a wider range but not as comprehensively as the open peril form. An all risk policy is often considered synonymous with open/special peril forms, yet the terminology can vary by provider, which can create confusion. Therefore, the distinction of the open or special peril form stands out in its broad coverage approach.