Definition:All risks
📋 All risks is a coverage concept in property and marine insurance under which a policy covers loss or damage from any fortuitous cause unless that cause is specifically excluded by the policy language. Despite the name, an all risks policy does not literally cover every conceivable peril — it simply reverses the burden of proof compared to a named perils policy. Under a named perils form, the insured must demonstrate that the loss was caused by one of the listed perils; under an all risks form, the insured need only show that a loss occurred, and the insurer must then prove that an exclusion applies if it wishes to deny the claim.
🔄 In practice, all risks policies contain a carefully crafted exclusion section that carves out perils the insurer is unwilling to cover or that are addressed by separate, specialized products. Common exclusions include war, nuclear hazard, wear and tear, inherent vice, and, increasingly, cyber-related losses via explicit cyber exclusions such as the Lloyd's market mandated clauses. Flood and earthquake may be excluded or sub-limited depending on the market and geography. The all risks form is the standard structure for commercial property policies in most major markets — including the U.S., UK, and much of Continental Europe and Asia — and is also the dominant form in marine cargo insurance, where the Institute Cargo Clauses (A) published by the International Underwriting Association represent the broadest all risks coverage tier. Underwriters price all risks coverage by evaluating the insured's total exposure profile and the residual risk after exclusions, rather than building up from individual named perils.
💡 The breadth of all risks coverage makes it the preferred choice for most commercial insureds and their brokers, because it avoids gaps that can arise when a loss falls between or outside named perils. However, the "all risks" label can create unrealistic policyholder expectations if exclusions are not clearly communicated — a recurring source of coverage disputes, particularly after large-scale events that straddle multiple peril categories. The COVID-19 pandemic brought this tension into sharp focus globally, as business interruption claims under all risks policies hinged on whether virus-related closures constituted covered physical loss or damage, with courts in the UK, Australia, and the U.S. reaching differing conclusions. For underwriters and risk managers alike, understanding the precise scope and limitations of all risks coverage is essential to avoiding both underinsurance and unanticipated claims exposure.
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