What is the main characteristic of a specified peril policy?

A specified peril policy is defined by the fact that it provides coverage only for the specific risks that are explicitly mentioned in the policy. This means that if a peril is not listed in the policy, it is not covered. This type of policy offers a more targeted form of insurance, allowing policyholders to select coverage for only the risks they feel are relevant or necessary for their situation. This can make a specified peril policy more affordable compared to more comprehensive coverage options that include a wider range of risks.

In contrast, policies that cover all types of risks (first option) would encompass a broader range of potential damages, and coverage would not be limited to specifically listed perils. Limitless coverage (third option) implies that there are no restrictions on the amount payable, which is not characteristic of specified peril policies, as they have defined limits based on the terms of coverage. Lastly, while some specified peril policies may be less expensive due to their limited nature, not all specified peril options are the most expensive available (fourth option). The cost can vary widely based on coverage limits, deductible amounts, and specific risks insured against.