All-Risks Coverage

All-risks coverage provides coverage for any incident that an insurance policy doesn’t specifically exclude. All-risks coverage, also called all-perils coverage, offers much broader protection than named risks coverage, which only covers incidents the policy specifically includes. However, the wording “all-risks coverage” is somewhat misleading, because any insurance policy contains numerous exclusions. As a result, insurance policies tend to avoid this language. Insurers today will use terms like “special perils coverage” to describe what they used to call “all-risks coverage.” This type of coverage makes it the insurer’s responsibility to prove that the claim is not covered rather than the insured’s responsibility to prove that the claim is covered.

Insurance providers generally offer two types of property coverage for homeowners and businesses – named perils and all-risks coverage. A policy with “all-risks coverage” will not actually cover any type of loss. Insurance policies are typically designed to cover specific situations and will list many incidents that aren’t covered. The most common types of perils excluded from all-risks include: earthquake, war, government seizure or destruction, wear and tear, infestation, pollution, nuclear hazard, market loss, etc. An individual or business that requires coverage for any excluded event under all risks may have the option to pay an additional premium, known as a rider or floater, to have the peril included in the contract.

By contrast, a named perils insurance contract only covers the perils specifically stipulated in the policy. For example, an insurance contract might specify that any home loss caused by fire or vandalism will be covered. Therefore, an insured who experiences a loss or damage caused by a flood cannot file a claim to his or her insurance provider, as a flood is not named as a peril under the insurance coverage. Under a named perils policy, the burden of proof is on the insured.

For example, a personal liability umbrella insurance policy, which covers large-dollar claims and certain incidents that homeowners and automobile insurance do not, is a type of insurance that might be considered to provide all-risks coverage. However, personal liability umbrella policies still excludes certain incidents, such as intentional damage, business liability, damage to your own property and damage resulting from acts of war, among other exclusions. These policies do cover everything else the policy is written to cover—that is, incidents related to personal liability. All-risks coverage doesn’t mean you can use your umbrella policy to pick up where your health insurance coverage falls short; an umbrella policy won’t cover your medical treatment.