If you’ve reviewed your homeowners insurance with your agent within the past few years (you really should if you havent already) you have probably heard the term “all risk.” What does it mean? Do you need it, or should you pass? I think I can help.
All risk is one of the many coverage options on a homeowners policy. While many optional coverages protect you from a specific risk that may or may not exist for you, an all risk policy can provide benefits to every home owner.
In order to better describe to you what you are choosing when you select an all risk policy, we need a little background. An insurance policy is a contract between the policyholder (yourself) and the insurance company. This contract describes what is covered, what is not covered, and how a claim is paid. A traditional homeowner policy is referred to as a named peril policy. If you were to read a named peril policy, you would see the perils (or causes of loss) that you are going to be covered for. Then a list of exclusions. If you have a loss, and the cause is on the list of exclusions (usually flood, earthquake, act of war, riot) or not one of the named perils, then the policy would not pay your claim. Likewise, if your cause of loss is one of the named perils, then your claim would be paid.
Now that you understand how a traditional homeowners policy works, lets talk about the shortcomings. The way that this policy is written, it leaves any causes of loss that the insurance company hasn’t thought of yet as not covered. In other words, if you have a claim, you will have to prove that your loss was caused by one of the named perils that you are covered for. For example, lets say you trip and break a glass topped table, or flush something expensive down the toilet accidently. These are not covered by a named peril policy because the peril of “oops” is not named.
Now lets talk about how an all risk policy can help. Instead of named perils, an all risk policy just has a list of exclusions. These exclusions are very similar to those in a named peril policy. The benefit to you is that you are no longer required to prove that your loss was caused by a covered peril. As long as the cause isnt on the list of excluisons, you’re covered.
Sounds great, but how much does it cost, right? Usually, an insurance company will decide if their homeowners policy will be all risk or named peril. Rarely is it simply an add on that you can choose. You may be shopping around for quotes and not even realize that some are all risk, and some named peril. The premium difference is usually minimal.
If you’ve decided that this is something that you would like, you can get an instant quote right here on our website. If you prefer you can also give us a call, an email or even stop by the office. We would love to help. is site down .