What Does All Perils Mean in Insurance?

“All perils” coverage in insurance is a type of policy that provides broad protection against loss or damage. It operates on the principle that if a risk or cause of loss is not specifically excluded in the policy, then it is covered. While the name suggests comprehensive coverage, it does not mean every possible event is insured. Instead, it signifies a wide scope of protection, with specific limitations outlined within the policy document.

Scope of “All Perils” Coverage

An “all perils” policy covers losses from any cause unless that cause is explicitly listed as an exclusion within the policy. This approach places the burden of proof on the insurer to demonstrate that a specific loss falls under an exclusion if they deny a claim. This contrasts with other policy types where the insured must prove the loss resulted from a covered event.

Common examples of perils typically covered under such a policy include fire, lightning, windstorm, hail, explosion, smoke, theft, and vandalism. Other covered incidents often involve falling objects, the weight of ice, snow, or sleet, and accidental water discharge from plumbing systems.

Common Exclusions in “All Perils” Policies

Despite the broad nature of “all perils” coverage, certain events are almost universally excluded due to their catastrophic potential or other considerations. These exclusions are explicitly stated in the policy to define the limits of coverage.

Earth movement, such as earthquakes, landslides, and sinkholes, is a standard exclusion in most “all perils” policies. Damage caused by floods from external sources, sewer backup, or sump pump overflow is typically excluded, often requiring separate flood insurance or specific endorsements. These events are often too widespread and costly for standard policies to cover.

Other common exclusions include war and nuclear hazards, which are deemed uninsurable due to their unpredictable and large-scale impact. Losses resulting from neglect, intentional acts by the insured, or normal wear and tear are also excluded, as insurance is designed to cover sudden and accidental losses, not those resulting from a lack of maintenance or deliberate actions. Some policies exclude costs associated with bringing a damaged property up to current building codes after a loss, known as “ordinance or law” exclusions, or damage caused by governmental action like seizure or destruction of property.

Distinguishing “All Perils” from “Named Perils”

The fundamental difference between “all perils” and “named perils” coverage lies in their approach to what is covered. A “named perils” policy explicitly lists the specific events or causes of loss for which the policy will provide coverage. If a loss occurs due to an event not on this predefined list, it is not covered, regardless of the circumstances.

Conversely, an “all perils” policy, sometimes referred to as “open perils” or “all-risk,” covers any cause of loss unless it is specifically excluded in the policy document. The burden of proof also differs significantly; with “named perils,” the insured must prove the loss was caused by a listed peril, while with “all perils,” the insurer must prove the loss was due to an exclusion to deny a claim. This distinction makes “all perils” policies generally broader in coverage, offering more extensive protection compared to their “named perils” counterparts.