State Farm Insurance License Practice Exam

The choice of a policy that only insures against specified perils is indeed a named (specified) peril policy. This type of insurance explicitly outlines which perils are covered within the policy documents. For instance, if a policy specifies coverage for fire, theft, or vandalism, it will only provide benefits if one of these named events causes a loss. This allows the insured to have a clear understanding of the risks they are protected against.

In contrast, a comprehensive policy typically covers a broader array of risks, sometimes including many unforeseen perils. A universal policy is a type of life insurance that combines flexible premiums with a cash value component and does not focus on property nor only specified perils. An open peril policy, on the other hand, offers coverage for all risks except those expressly excluded, providing a higher level of protection. Understanding the distinctions between these types of policies is crucial for selecting the appropriate coverage based on individual needs and risk tolerance.