What is the main difference in responsibility between a named perils policy and an open perils policy?

The main difference between a named perils policy and an open perils policy lies in the burden of proof regarding coverage for losses. In a named perils policy, the policy specifies which perils are covered. Therefore, if a loss occurs, the policyholder is responsible for demonstrating that the specific cause of loss is one of those named perils. In contrast, an open perils policy (also known as an all-risk policy) covers all causes of loss except for those specifically excluded in the policy. In this scenario, the insurance company has the burden of proving that a particular cause of loss is excluded from coverage. This distinction is significant because it shifts the responsibility and burden of proof in regard to damages suffered by the policyholder, offering greater security and peace of mind with an open perils policy.

This understanding is critical for individuals involved in risk management and insurance, as it helps clarify coverage expectations and the implications of different policy types on claims handling and potential disputes.