All Risks

What Is All Risks Coverage?

All risks coverage is a type of insurance policy that protects the insured against any loss or damage unless the policy specifically excludes it. Rather than listing each covered cause of loss, an all-risks policy starts from the opposite direction: it covers nearly everything and then names the exceptions. The label is somewhat misleading, because no policy covers every possible risk. It is better understood as broad coverage with defined limits.

How It Works

All-risks policies are built around a few parts. The insuring clause describes the broad promise to pay for physical loss or damage to the covered property. The exclusion list then removes specific causes, such as wear and tear, deliberate damage by the owner, or certain types of flood or earthquake, depending on the policy. Limits, deductibles, and conditions also apply, and they can reduce what is paid even when a covered loss occurs.

When a claim is made, the insured generally needs to show that a loss happened. The insurer then usually has to point to a specific exclusion to deny the claim. In many legal systems, this allocation of the burden of proof is a key feature that distinguishes all-risks coverage from narrower forms.

All Risks Versus Named Perils

The main alternative is a named-perils policy, which covers only the causes of loss it lists, such as fire, theft, or windstorm. If a cause is not on the list, it is not covered. All-risks coverage reverses this logic. A loss from a cause nobody listed may still be paid, which makes the policy broader but usually more expensive. The premium reflects how much risk the insurer takes on, and the underwriting process considers the property, its location, and the insured's history.

Where It Is Used

All-risks forms are common in property insurance for homes, businesses, and high-value items such as jewelry or art. They are also widely used in marine cargo insurance, where goods in transit are often insured on an all-risks basis. Coverage is sometimes added to a standard policy as an endorsement.

Why It Matters

For individual investors, the term matters mainly when evaluating what a policy actually covers. Broader wording offers more protection but may carry higher costs, and the exclusion list is where the real limits appear. Reading the exclusions, not just the headline phrase, is the way to understand a policy.