Legal Definitions - all-risk insurance

All-risk insurance is a type of insurance policy that offers broad coverage for potential loss or damage to insured property. Rather than listing the specific dangers or "perils" it covers, an all-risk policy covers all potential causes of loss or damage, unless a particular cause is explicitly excluded in the policy document. This means that if a cause of loss is not specifically mentioned as an exclusion, it is generally covered.

Here are some examples to illustrate:

• Imagine a small bakery that has an all-risk insurance policy for its commercial kitchen equipment. One night, a pipe bursts unexpectedly, causing significant water damage to a specialized oven and mixer. Since "burst pipes" or "water damage from internal plumbing" were not listed as specific exclusions in their policy, the insurance company covers the cost of repairs and replacement. This demonstrates all-risk coverage because the policy didn't need to specifically name "burst pipes" as a covered event; it covered it because it wasn't excluded.

• Consider a homeowner who purchases an all-risk policy for their personal belongings, including a valuable antique desk. During a severe windstorm, a tree branch falls, not directly on the house, but on a nearby power line, causing a sudden power surge that fries the electronics inside the desk's hidden compartments. Because "power surges from external events" was not an exclusion in their policy, the damage to the desk is covered. If it were a "named perils" policy, it might only cover direct wind damage or fire, and the power surge might not have been listed.

• A technology company ships a prototype device to a client using an all-riskcargo insurance policy. During transit, the device is accidentally dropped by a forklift operator at a warehouse, causing internal damage. The policy covers the repair or replacement cost because accidental damage during handling was not among the specific exclusions (which might include things like war, nuclear contamination, or inherent vice of the goods) listed in the policy. The broad nature of the all-risk policy ensures coverage for unforeseen accidents not explicitly ruled out.