What Is All Perils Coverage and What Does It Cover?

Insurance policies offer financial protection against unforeseen events. Understanding policy terms is important for policyholders. “All perils coverage” stands out as a comprehensive option, providing extensive protection against a broad spectrum of risks.

Defining All Perils Coverage

All perils coverage, also known as “open perils” or “all-risk” coverage, is a type of insurance that provides protection for all causes of loss unless specifically listed as an exclusion within the policy document. This approach differs significantly from “named perils” policies, which only cover risks explicitly itemized in the agreement. With an all perils policy, if a cause of loss is not mentioned as an exclusion, it is generally considered covered.

The fundamental principle of all perils coverage places the burden of proof on the insurer. If a loss occurs, the policyholder typically needs to demonstrate that the damage happened while the policy was in effect. Once this initial burden is met, the responsibility shifts to the insurance company to prove that the loss was caused by an event specifically excluded in the policy. This structure provides a broad safety net for the insured, as any unlisted cause of damage would likely be covered.

Typical Coverage Under All Perils

Under an all perils policy, coverage is extensive, encompassing a wide array of events. Common occurrences like fire, theft, and vandalism are typically covered. Damages resulting from natural elements such as windstorms, hail, and falling objects are also generally included.

Furthermore, many all perils policies extend to cover water damage from sources like burst pipes or accidental discharge from appliances. While the specific wording of each policy can vary, the overarching intent is to provide protection against nearly any incident that might cause loss or damage to insured property. These examples highlight the broad protective nature of all perils coverage, making it a robust option for various types of property.

Common Exclusions

Despite its comprehensive nature, all perils coverage does contain specific exclusions that delineate the boundaries of protection. These typically include catastrophic events that are often considered uninsurable under standard policies or are covered by separate, specialized insurance products. For example, damage from floods and earthquakes are almost universally excluded from all perils policies. Coverage for these risks usually requires purchasing dedicated flood insurance or earthquake insurance.

Other common exclusions often relate to acts of war, nuclear hazards, and governmental actions, which are deemed beyond the scope of standard risk assumption for insurers. Intentional acts by the insured, or damage resulting from neglect, wear and tear, and poor maintenance, are also typically not covered. These exclusions are in place because they either represent risks that are not accidental or are within the control of the property owner to prevent or mitigate. It is important for policyholders to carefully review the exclusions section of their specific policy to understand its limitations.