All Risks Insurance Explained

What “All Risks” Means

All risks (also called open perils or comprehensive insurance) is a type of property insurance that covers any peril except those specifically excluded in the policy. Instead of listing covered events, an all risks policy lists exclusions. If a cause of loss is not on the exclusion list, it is generally covered.

Key differences from named-perils coverage

• Named perils: Policy covers only the risks that are explicitly listed. The insured must show the loss was caused by a named peril.
• All risks: Policy covers all perils except those expressly excluded. The insured must show physical loss or damage; then the insurer must prove an exclusion applies.

Common exclusions

Typical exclusions in all risks policies include:
– Earthquake and flood (often available via separate policies or endorsements)
– War, acts of terrorism, and government seizure
– Wear and tear, gradual deterioration, and maintenance issues
– Infestations, contamination, pollution, and nuclear hazards
– Market losses or business interruption without physical damage

Many of these perils can be added back by purchasing a rider, floater, or separate policy.

Burden of proof

Coverage under an all risks policy generally begins with the insured proving physical loss or damage. Once that is established, the insurer must demonstrate that a specific exclusion applies to deny coverage. Disputes often hinge on whether loss was physical (covered) or merely economic (often not covered unless an endorsement applies).

When to choose all risks coverage

Consider all risks insurance if you want broader protection for property and can afford higher premiums. Factors to weigh:
– Value and uniqueness of the property (homes, commercial buildings, fine art, jewelry)
– Likelihood and consequence of excluded perils (e.g., living in an earthquake zone)
– Cost difference between all risks and named perils policies
– Availability and cost of endorsements for specific exposures (flood, earthquake, business interruption)

Practical examples

• Tree falls on a roof: If “tree damage” is not an exclusion, an all risks policy typically covers the repair.
• Power outage causing lost income: If no physical damage occurred, an insurer may deny a business-interruption claim unless a policy specifically covers loss of use or utility service interruptions.
• Flood damage: Usually excluded from standard all risks homeowner policies and requires a separate flood policy or endorsement.

Tips for buyers

• Read the exclusion list carefully—exclusions determine actual coverage.
• Ask about riders or separate policies for common exclusions (flood, earthquake, terrorism).
• Compare premium costs against the probability and potential size of a claim.
• Note that a single policy can use both approaches (e.g., all risks on a building, named perils on contents).

Bottom line

All risks insurance provides broad protection by covering every peril except those expressly excluded. It typically costs more than named perils coverage and still requires careful review of exclusions and endorsements to ensure the policy matches your risk exposures.