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Named Perils vs All Risk

Named Perils vs All Risk

Named Perils vs All Risk

There are variations on this but essentially insurance companies offer two types of property coverage for residential and commercial property; Named Perils and All-Risk.

Named Perils and All-Risk. 

What is the difference?

A named peril insurance policy covers only what is specifically listed in the policy wording. If the peril isn’t listed or itemized, it isn’t covered.  Examples of perils that would be listed and therefore covered are, fire, windstorm, hail, aircraft, riot, vandalism, explosion and smoke.  On the other hand, an all-risk policy or a named-exclusions policy lists the excluded perils rather than those covered.  In other words, it covers everything other than items specifically excluded.  Consequently, exclusions and limitations determine coverage.  Clearly the all-risk policy is broader in scope and as a result, more expensive than the named perils policy.  Another clear difference between the two is the following;  Under an named perils policy, the burden is on the insured to prove the peril causing the damage is covered.  Whereas, under an all-risk policy, the burden is on the insurance company to prove that the peril causing the damage is not excluded. 
The most common perils excluded in an all-risk policy include:
  • War
  • Earthquake or earth movement
  • Flood, mudslide, seepage and sewer backup (and sometimes surface water that builds up after heavy rains, underwater springs, groundwater, burst water pipes, overflowing toilets, and wind or wave-driven water)
  • Governmental seizure or destruction of property
  • Boiler explosion
  • Off-premises utility service interruption
  • Building ordinance or law
  • Seepage or leakage of water over a period of time
  • Electrical damage to electrical devices
  • Employee dishonesty
  • Wear and tear; rust, corrosion, fungus, decay, deterioration, hidden or latent defect smog; settling, cracking, shrinking, or expansion; nesting, infestation or release of secretions by insects, birds, rodents or animals
  • Damage to building interiors by rain, snow, sleet, ice, sand, or dust unless the roof or walls are first damaged – except damage by thawing of snow, ice or sleet
  • Mechanical breakdown
  • Theft of building materials and supplies not yet attached to buildings
  • Pollution
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