What Is All-Risk Insurance?

All-risk insurance is a form of insurance that provides coverage for any potential risks not excluded in the contract. For instance, if a homeowner’s all-risk policy doesn’t specifically exclude flood damage, the policy would cover such an event. Moreover, this type of insurance, along with named perils, is commonly available to homeowners and business owners.

What Is All-Risk Insurance?

With all-risk insurance, policyholders can claim compensation for any events not directly excluded by the contract. Additionally, they can secure the right to pay extra for a rider or floater to cover specific events excluded from the policy. This varies from named perils insurance, where compensation is limited to events specifically listed in the policy.

How does it work?

Umbrella insurance under personal liability offers coverage for high-value claims and specific incidents not typically covered by homeowners or car insurance. It’s often referred to as offering comprehensive coverage similar to all-risk insurance. However, it still excludes some incidents like intentional damage, commercial liability, personal property damage, and harm from war, among other exclusions.

Despite these limitations, these policies extend coverage to everything else related to personal liability as outlined in the policy. Furthermore, a policy with all-risks insurance does not provide coverage for every sort of loss. However, insurance policies are established to cover the main events and list numerous incidents that are not covered.

Generally, individuals or businesses needing coverage for an excluded situation based on an all-risk coverage policy can pay an additional premium. It’s often referred to as a rider or floater to include the specific peril in the contract. Furthermore, consumers need to understand that all-risk coverage doesn’t imply you can utilize an umbrella policy to cover health insurance coverage. This outcome is because umbrella insurance does not cover medical treatment expenses.

What Does All-Risk Insurance Cover?

When discussing perils and risks, we typically refer to occurrences such as:

  • Water damage.
  • Frozen or burst pipes.
  • Sewer backup damage (though it’s advisable to carefully review your policy).
  • Smoke and fire damage.
  • Lightning strikes.
  • Windstorms and hail.
  • Falling objects.
  • Theft.
  • Vandalism.
  • Ice, snow, or sleet.
  • Impact by vehicles, watercraft, or aircraft.
  • Civil disturbances or riots.
  • Accidental damage from electrical current.

Despite being referred to as all-risk insurance, certain types of coverage are still secured separately. It’s always advisable to consult your policy to understand what is included and what isn’t. Keep in mind that every insurance provider and policy may vary in their coverage terms and conditions.

What Does All-Risk Insurance Not Cover?

These exclusions are the main situations highlighted in the contract and are quite common, regardless of the all-risk name. This outcome occasionally makes individuals encounter terms like comprehensive insurance or an open peril policy.

Some of the most common exclusions include:

  • General wear and tear.
  • Nuclear incidents.
  • War.
  • Damage from acts of terrorism.
  • Pest damage (e.g., rodents and termites).
  • Earth shifts, causing issues like foundation cracks.
  • Pollution.
  • Market loss.
  • Mechanical breakdown.
  • Employee theft.
  • Boiler explosion
  • Flooding
  • Earthquakes.

All-Risks Coverage and Named Peril Insurance

In a named peril insurance contract, coverage extends solely to the perils specifically stated in the policy. For instance, the contract might specify coverage for home losses due to fire or vandalism.

However, if an individual suffers loss or damage from a flood, they cannot file a claim with their provider, as flooding is not listed as a covered peril. Under this policy, the burden of proof falls on the insured individual.

Burden of Proof

Under an all-risks policy, coverage is caused by physical loss or damage to property. Generally, the insured must show that such loss or damage has occurred. Additionally, the burden of proof falls to the provider, who is then required to establish that the exclusion applies to the insurance.

For instance, a small enterprise suffers a power outage and files a claim based on physical loss. The insurance company may reject the claim, arguing that the enterprise faced financial loss due to the inability to use the property, which differs from a physical loss of property itself.

What is contractor all-risk insurance?

A contractor all-risk policy is an insurance arrangement in which the insurer offers coverage against risks associated with workers and the construction site. Additionally, it safeguards the insured individual throughout the construction period.

This type of insurance specifically includes contractual obligations and site-related work involving the construction of commercial and residential buildings, dams, bridges, roads, sheds, and factories.


All-risk insurance, also known as all-risk coverage, is an insurance product designed to provide coverage for any incident not explicitly mentioned in the policy.

These policies assume a significant amount of risk for the insurer and are relatively less common compared to named-risk coverage. Moreover, named-risk coverage states what is covered, while all-risk policies primarily list what is to be excluded.