Definition§
All Risk / All Peril Insurance refers to an insurance policy that covers all types of losses except for those specifically mentioned as exclusions. If the policy does not explicitly exclude a particular type of loss, it is automatically covered. This insurance option provides the broadest form of coverage, protecting against numerous potential threats except those explicitly outlined in the exclusions section of the policy.
Examples§
- Wind Damage: If an insurance policy does not exclude losses due to wind damage and the insured’s property is damaged by a tornado, the insurance will cover the losses incurred.
- Falling Objects: Suppose a meteor falls on a policyholder’s house. If the policy does not specifically exclude losses from falling objects, the policyholder is covered for such an uncommon yet potential risk.
- Theft: If theft is not listed among the policy exclusions, then the policyholder is covered in case their property is stolen.
Frequently Asked Questions§
1. What does All Risk / All Peril Insurance cover?
- It covers all perils or risks except those specifically mentioned in the exclusions section of the policy.
2. What is typically excluded in an All Risk policy?
- Common exclusions may include acts of war, nuclear disasters, wear and tear, and intentional damage by the policyholder.
3. Are natural disasters like earthquakes and floods covered?
- These are often excluded from standard All Risk policies; however, additional riders can be purchased to cover such natural disasters.
4. Is All Risk insurance commercial or residential?
- All Risk insurance can be used for both commercial and residential properties.
5. How does All Risk insurance differ from Named Perils insurance?
- Named Perils insurance only covers specific risks named in the policy, whereas All Risk insurance covers all risks except those explicitly excluded.
Related Terms§
- Named Perils Insurance: Only covers losses from perils expressly named in the policy.
- Exclusions: Specific conditions or circumstances for which the policy will not provide coverage.
- Rider: An additional policy provision that provides extra benefits or limits coverage.
- Premium: The amount paid for an insurance policy.
Online References§
- Investopedia on All-Risk Insurance
- IRMI Glossary: All Risk / All Peril
- Insurance Information Institute on Property Insurance
Suggested Books§
- “Property and Liability Insurance Principles” by George E. Rejda.
- “Insurance and Risk Management” by P. Periasamy.
- “Fundamentals of Risk and Insurance” by Emmett J. Vaughan and Therese M. Vaughan.
Fundamentals of All Risk / All Peril Insurance: Insurance Basics Quiz§
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