South Carolina Personal Lines Practice Exam

Which policy form is known for having the largest exclusion section?

1. Basic peril

2. Named peril

3. Open peril

4. Broad form

The correct answer is: Open peril

The policy form known for having the largest exclusion section is the open peril policy. This type of policy covers a wide range of risks and perils unless specifically excluded. Because it aims to provide comprehensive protection, the exclusions must be detailed and extensive to clarify what is not covered. In contrast, basic peril and named peril policies focus on specific events that are covered. Basic peril policies tend to have fewer covered perils and therefore have a smaller exclusion section, while named peril policies list the perils that are covered without needing extensive exclusions. The broad form is similarly more inclusive than basic or named peril policies, though still more limited in comparison to open peril policies. Thus, the open peril policy is characterized by its extensive list of exclusions to delineate the coverage, making it the option with the largest exclusion section.