What is covered by all risk insurance?

All-risk insurance covers any direct, accidental, and physical loss or damage from any cause, unless the policy explicitly lists it as an exclusion.

💡 How It Works

• Open perils: Automatically covers any unspecified risk not named in the contract.
• Fortuitous events: Only protects against unexpected, accidental, or external occurrences.
• Burden of proof: You prove physical loss occurred; the insurer proves an exclusion applies.

⚠️ Common Exclusions (Not Covered)

Most all-risk policies explicitly omit specific high-risk or predictable events:

• Acts of war, terrorism, or government seizure
• Earthquakes, floods, and standard natural disasters (unless added via rider)
• Normal wear and tear, or gradual deterioration
• Infestations (insects or rodents) and mold
• Nuclear hazards and pollution

An all-risk insurance policy (also called an open-peril or special-peril policy) covers any direct physical loss or damage to your property from any cause, unless the contract specifically excludes it.

How Coverage Works

• Broad Protection: Unlike named-peril policies that only cover listed events (like fire or theft), an all-risk policy assumes everything is covered until proven otherwise.
• Fortuitous Events: It generally pays out for accidental, sudden, and unforeseen external incidents.
• Burden of Proof: You only need to show that physical loss or damage happened; the insurer must then prove that an exclusion applies if they want to deny the claim.

Common Examples of What Is Covered

• Fire and smoke damage
• Vandalism and theft
• Falling objects
• Accidental and sudden damage (e.g., a dropped item breaking equipment)
• Certain natural disasters or weather events (if not named as exclusions)

Common Exclusions

Despite the name, an all-risk policy does not cover everything. Standard exclusions typically include:

• Earthquakes and floods (often require separate riders or endorsements)
• Wars and acts of terrorism
• Normal wear and tear, or gradual deterioration
• Mold, insect, or rodent infestations
• Governmental seizure and nuclear hazards

You can learn more about how these broad policies operate by checking out definitions from Investopedia or US Legal Forms.

All risk insurance (also known as open perils insurance) is a comprehensive policy that automatically covers any cause of loss or property damage unless the contract explicitly lists it as an exclusion.

Despite its name, it does not cover "everything". It offers broad protection, but you must check the fine print for what is left out.

How All Risk Insurance Works

• Coverage Rule: If a mishap happens and the policy does not ban it by name, the insurance company must pay for the damage.
• Burden of Proof: The insurer must prove that an excluded event caused the damage to deny your claim.
• Contrast with Named Perils: A named perils policy only covers specific risks listed in the contract, such as fire or theft. Under a named perils plan, you must prove the cause of loss is on that list.

Common Exclusions

Most all risk policies leave out predictable or catastrophic events. Standard exclusions include:

• Earthquakes and floods
• Acts of war or government seizure
• Normal wear and tear, or aging
• Mold, insect infestations, and pollution
• Nuclear hazards

How to Get More Protection

• You can buy extra coverage called a rider or floater to protect against specific excluded events, such as floods or earthquakes.
• You can learn more details about these terms through the Hub International Insurance Glossary.

"Risk insurance" usually refers to either All Risk Insurance, which covers any property loss or peril unless explicitly excluded, or Builder's Risk Insurance, which specifically protects buildings and materials during construction.

All Risk Insurance (Open Perils)

An all-risk policy covers broad, comprehensive property damage from any unexpected cause, with the burden on the insurer to prove an event is excluded.

• Covered: Any sudden, unforeseen physical loss or damage to property unless specifically named in the contract.
• Common Exclusions: Earthquakes, war, wear and tear, government seizure, pollution, and nuclear hazards (though these can often be added via a rider).

Builder's Risk Insurance (Course of Construction)

This specialized property insurance covers structures while they are being built or undergoing major renovation.

• Covered Perils: Fire, lightning, wind, hail, theft, vandalism, explosions, and vehicle collisions.
• Covered Property: The physical building frame, foundations, scaffolding, uninstalled fixtures, and construction materials (including items temporarily in transit or stored off-site).
• Common Exclusions: Employee injuries, faulty workmanship, design defects, normal wear and tear, and general liability claims (which require a separate policy).

Standard insurance policies do not cover predictable, intentional, or catastrophic Uninsurable Risk: Definition and Examples events that would bankrupt the insurer's risk pool.

Common Uncovered Risks

• Intentional and Illegal Acts: Deliberate damage or losses resulting from criminal behavior are never covered. Insurance protects against accidental or unforeseen misfortune.
• Normal Wear and Tear: Gradual deterioration, corrosion, rust, and routine maintenance issues (like a rotting roof or old plumbing) are the owner's responsibility.
• Natural Disasters (Specific): Standard property and homeowners policies typically exclude major natural disasters like floods, earthquakes, and sinkholes. These require separate endorsements or specialized policies.
• Acts of War and Nuclear Hazards: Wars, civil unrest, nuclear radiation, and government actions are too large and unpredictable to price into standard policies.
• Pests and Infestations: Damage from termites, rodents, birds, or insect infestations is usually viewed as preventable through maintenance and excluded.
• Business Activities on Property: Standard home insurance does not cover liability or property damage arising from running a full-time business out of a residential home.

Broad Business and Economic Risks

• Reputational Risk: Losses to net profit caused by bad PR, public backlash, or brand damage cannot be easily calculated or covered.
• Regulatory and Political Shifts: Unpredictable changes in laws, government policies, or trade restrictions are managed through mitigation rather than insurance transfer.