# All Risk Insurance Explained—What It Covers and What It Doesn't

## What Is All Risks?

"All risks" refers to a comprehensive type of insurance coverage in the property-casualty market that covers any peril not specifically excluded in the policy. Unlike named perils insurance, which only covers explicitly listed events, all risk insurance assumes coverage for all perils unless they are explicitly omitted. Common exclusions include earthquakes, war, and wear and tear. Policyholders can opt for additional coverage on excluded events by paying for a rider or floater.

### Key Takeaways

*   All risk insurance covers any peril not explicitly excluded in the policy, opposite to named perils insurance, which only covers listed risks.
*   Common exclusions in all risk policies include events like earthquakes, war, and nuclear hazards, but these can often be covered with additional riders.
*   The burden of proof in an all risk policy initially falls on the insured to show physical damage or loss before the insurer must prove an exclusion applies.
*   Because of its comprehensive coverage, all risk insurance typically costs more than named perils insurance and requires careful review of exclusions.

## All Risks Insurance vs. Named Perils: Key Differences

Insurance companies usually offer two types of property coverage for homeowners and businesses: [named perils](https://www.investopedia.com/terms/n/named_perils.asp) and "all risks." A named perils insurance contract only covers the perils stipulated explicitly in the policy.

For example, an insurance contract might specify that any home loss caused by fire or vandalism will be covered. Therefore, an insured who experiences a loss or damage caused by a flood cannot file a claim with their insurance provider, as a flood is not named as a peril under the insurance coverage. Under a named perils policy, the [burden of proof](https://www.investopedia.com/terms/b/burden-proof.asp) is on the insured.

An all risks insurance contract covers the insured from all perils, except the ones specifically excluded from the list. Contrary to a named perils contract, an all risks policy does not name the risks covered, but instead, names the risks not covered. In so doing, any peril not named in the exclusions list is automatically covered.

Common exclusions from "all risks" policies include earthquakes, wars, government seizures, wear and tear, infestations, pollution, nuclear hazards, and market losses. Individuals or businesses can pay extra for a [rider](https://www.investopedia.com/terms/r/rider.asp) or [floater](https://www.investopedia.com/terms/f/floater.asp) to cover excluded events under "all risks."

> **Important**
>
> "All risks" are also called open perils, all perils, or comprehensive insurance.

### The Role of Burden of Proof in All Risks Insurance

Coverage under an "all risks" policy starts with physical loss or damage to property. An insured must prove physical damage or loss has occurred before the burden of proof shifts to the insurer, who then has to prove that an exclusion applies to the coverage.

For example, a small business that experienced a power outage may file a claim citing physical loss. The insurance company, on the other hand, might reject the claim, stating that the company experienced a loss of income from a mere loss of property use, which is not the same thing as a physical loss of property.

## Factors to Consider When Choosing All Risks Insurance

"All risks" is the broadest coverage available, protecting against more loss events, so it's usually more expensive. The cost of this type of insurance should, therefore, be measured against the probability of a claim.

A single policy can include both named perils and "all risks." For example, an insured may have a property insurance policy that has all risks coverage on the building and named perils on his personal property. Always read the fine print of any insurance policy to understand its exclusions.

Finally, "all risks" policies don't cover everything; exclusions reduce the actual coverage. Make sure you look for the exclusions in any prospective policy.

## What Is the Meaning of All Risk?

All risk is a type of insurance product that requires a risk to be explicitly stated for it to not be covered. For example, if the contract does not state "tree damage" as an omitting risk, then if a tree were to fall on the insured property under an all risk policy, since the tree was not explicitly mentioned, the damage would be covered.

## What Are the 4 Major Types of Insurance?

There are insurance products for almost everything, but for most people, there are four types of insurance products that are seen more than any other. Life insurance, auto insurance, health insurance, and long-term disability insurance are those that [cover most of an individual's risk factors](https://www.investopedia.com/financial-edge/0212/4-types-of-insurance-everyone-needs.aspx). Once someone owns significant property like a house or [something high-value like jewelry](https://www.investopedia.com/the-best-jewelry-insurance-8783729) or other collector items, they will need additional policies tailored to these individual items. However, most people who rent will own the four major types listed above.

## What Are All Risk Perils?

All risk perils is another name for all risk insurance as it relates to individual risks. Named perils is an insurance product that names what is insured in case of an accident. All risks, assuming there are no perils mentioned, could be considered all risk perils since all perils are assumed as risk (under the policy). However, these are rare as they put undue risk acceptance on the insurer, and it is much more common to see many perils listed, even on an all risks policy.

## The Bottom Line

All risk insurance, also known as open perils or comprehensive insurance, automatically covers any risk not explicitly excluded in the contract. It provides broad protection and allows policyholders to file claims for unforeseen events, unless specifically named as an exclusion, such as earthquake or nuclear hazard. While this type of policy offers extensive coverage, it often comes at a higher cost compared to named perils insurance. When considering all risk insurance, it's crucial to carefully review the exclusion list and consider purchasing riders for additional protection against specific risks.