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Term: All Risks Coverage

18 Apr 2015

DEFINITION of ‘All Risks Coverage’
Insurance 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.

A policy with “all risks coverage” will not actually cover any type of loss. Any insurance policy is designed to cover specific situations and will list many incidents that aren’t covered. At the broadest level, a home-owners insurance policy doesn’t provide health insurance coverage, and an automobile insurance policy doesn’t provide life insurance coverage. More specifically, even a policy designed to cover a wide range of incidents will not really cover all risks.

For example, a personal liability umbrella insurance policy, which covers large-dollar claims and certain incidents that home-owners and automobile insurance do not, is a type of insurance that might be considered to provide all risks coverage. However, despite their broad coverage, personal liability umbrella policies exclude 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.

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