Special Multi-Peril Policy

Updated: 09 June 2023

What Does Special Multi-Peril Policy Mean?

Special multi-peril policy or SMP refers to a commercial insurance that covers both loss of property and liability. The extent of the coverage varies depending on the SMP the insured has bought or the specifications made during the purchase from the insurer.

Insuranceopedia Explains Special Multi-Peril Policy

Rather than buying both property insurance for property damage or loss and liability insurance for legal and monetary obligations to third parties, a person or an organization can buy a special multi-peril policy (SMP). SMP can cover both property loss or damage as well as liability. Because of the nature of its coverage, an SMP is a package policy. This means that a person buying an SMP is purchasing a number of policies rolled into one. An SMP is often discounted so that it becomes cheaper compared to buying several policies.

SMPs have two general categories: the named peril form and the all-risk form. The named peril form is called as such because the policy specifies the risks or perils that it can cover. The all-risk form has a wider coverage than the named peril form. It doesn’t mean that it is the better choice because some risks which the all-risk can cover are those which a business might be unlikely to encounter or experience. Also, the all-risk form contains a number of exclusions. Finally, at an additional cost, the insured may want to include coverage for something that is excluded in the policy. For instance, property damage from an earthquake is one of the exclusions. So, the insurer may need an earthquake endorsement in which an insurer pays for renovations made due to earthquake damage.

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