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Named Peril vs. All Risk BOPs for North Carolina Business Owners

By December 8, 2021December 15th, 2021Insurance

North Carolina is home to more than 900,000 small businesses that employ more than 44% of the state’s workforce. Any time a businesses experiences a disaster, there is damage done to the local economy. That’s why the smart small business owner needs expansive property & casualty insurance. It can protect them against such losses. Most small businesses benefit most from the tailored coverage of a business owners policy, also called a BOP.
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Yet, all property insurance is different, including in the types of disasters they cover. Some are called named peril policies, while others are called all risk policies. Each will apply differently to different losses.

What is commercial property insurance?

Business insurance will help you pay the recovery costs resulting from unexpected or unavoidable losses impacting your company. Property insurance specifically helps you repair or replace your damaged belongings and materials. For example, if a fire damages your business, then your BOP’s property insurance can help you rebuild and replace contents.

The limitation, however, is that to receive payment, your policy must cover the cause of the damage. Not all property insurance covers all types of hazards. Whether you have an all risk or named peril policy, you might or might not have coverage for certain damage.

Named Peril BOPs

Property insurance will only pay for damage if it arises from certain types of events. With named-peril coverage, the policy will only pay for damage triggered by a specific list of hazards.

For example, your policy might list that it will cover damage from fires, hail, windstorms, vandalism, theft and a few other hazards. Any hazard not listed will not have coverage. You might have to buy special endorsements to get more appropriate coverage. As a result, named peril BOPs are usually more restrictive in when they will pay for damage.

All Risk BOPs

An all risk BOP is the opposite of a named peril BOP. It will cover you against any type of damage except for a specific list of excluded perils. So, when you see a list of exclusions on an
all risk policy, you will know that you do not have coverage against these losses. To get additional coverage, you might be able to buy a policy endorsement or a separate insurance policy.

In the end, both named peril and all risk BOPs will still include exclusions. They will also limit how much they will pay you for certain claims. However, each will apply differently. Still, you can adapt your coverage so that it will more comprehensively insure your property against potential hazards.

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