Definition:All-risks policy
📋 All-risks policy is an insurance contract that provides coverage for all causes of physical loss or damage to insured property except those perils or circumstances specifically excluded in the policy language. Widely used in commercial property, marine, and personal lines markets around the world, it represents the broadest standard form of property insurance protection available. The term is sometimes used interchangeably with "open-peril policy" or "special form" — the latter designation being common in the United States, where ISO commercial property forms use the "special" label to denote all-risks coverage.
🔍 An all-risks policy operates by establishing a presumption of coverage: once the insured proves that a direct physical loss occurred to covered property during the policy period, the insurer must pay unless it can demonstrate that the loss resulted from an excluded peril. Typical exclusions span war, nuclear hazard, governmental action, earth movement (unless endorsed), flood (often requiring separate flood coverage), intentional loss, ordinance or law costs, and wear and tear. The exact exclusion set differs across markets — Solvency II jurisdictions in Europe, for instance, may see different standard wordings than those used under U.S. state-regulated forms or in Asian markets influenced by Lloyd's wordings. Underwriters adjust premiums, deductibles, and sublimits to manage the broader exposure inherent in this coverage form, often performing detailed risk assessments of construction, occupancy, protection systems, and external exposures.
🏗️ Choosing an all-risks policy over a named-peril alternative carries meaningful consequences for both the insured and the insurer. For businesses, it closes gaps that can emerge when a loss stems from an unusual or unexpected event not contemplated in a named-peril list — a distinction that has proven decisive in high-profile coverage disputes involving events like water damage from burst sprinkler systems, collapse, or accidental contamination. From the reinsurer's perspective, portfolios dominated by all-risks policies require more conservative reserving and catastrophe modeling because the range of potential loss triggers is wider. For brokers placing coverage, explaining the practical difference between an all-risks and a named-peril form is one of the most important advisory conversations in commercial property placement.
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