Alabama Property and Casualty Practice Exam

If you want coverage for everything that is not excluded, you should buy?

1. Special cause of loss

2. Basic cause of loss

3. Broad cause of loss

4. Named peril coverage

The correct answer is: Special cause of loss

The option that allows coverage for everything that is not excluded is "Special cause of loss." Special cause of loss forms provide coverage on an open-perils basis, meaning they cover all types of risks except for those specifically excluded in the policy. This contrasts with other options that typically involve named perils, which only cover specific risks that are clearly listed in the policy. For instance, basic cause of loss and broad cause of loss both operate on a named peril basis to varying extents; they cover only those perils explicitly mentioned, which limits the scope of coverage. Specifically, basic cause of loss generally covers a more limited range of risks, while broad cause of loss expands the number of covered perils but still adheres to the named peril framework. Named peril coverage explicitly lists the perils for which coverage is provided, further narrowing the protection. In summary, special cause of loss is the most inclusive option, allowing policyholders to obtain coverage for potential risks as long as they have not been specifically excluded from the policy.