What Is an All Risk Homeowners Insurance Policy?

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Picking out and buying an insurance policy is never a fun process, and that’s doubly true when it comes to purchasing homeowners insurance. Homeowners insurance policies have all kinds of different add-ons, options, and preferences, and it can feel overwhelming to try and figure out what it is that you want, what it is that you need, and what it is that you can afford.
That’s exacerbated by the use of terms that aren’t always clear. Insurance policies often feature confusing or vague terms, and one such term with homeowners insurance is an all risk policy.
When you purchase a homeowners insurance policy, you’ll be given the option to buy an all risk policy. But what is an all risk policy, and what does it mean to have one?

What is an all risk policy?

An all risk policy is an insurance policy that covers all perils other than ones that are explicitly excluded. In insurance terms, a peril refers to an event that can cause damage to the item being insured. Rainstorms, fires, earthquakes, and thieves are all examples of perils on a homeowners insurance plan.
An all risk policy starts from a place of covering you in the event of any peril. Any perils that are not covered are then listed in the insurance plan as “exclusions.” Usually an all risk policy doesn’t actually cover all risks, it’s just a mostly comprehensive plan that covers almost all perils. All of the perils that are not covered will be listed in the exclusions, so you can know exactly what is covered.

What is the opposite of an all risk policy?

The opposite of an all risk policy is a named perils policy. In a named perils policy, your insurance plan will list all of the items that are covered by your insurance, rather than listing the items that are not covered. Named perils starts from no coverage, and adds on perils, whereas all risk starts from fully comprehensive coverage, and deducts perils.

What are the benefits of an all risk policy?

An all risk policy has one main benefit: It’s very comprehensive. While most all risk policies are not entirely comprehensive (they usually exclude a few uncommon perils), they are far more comprehensive than a named perils policy.

What are the downsides of an all risk policy?

Just as there is one main benefit to an all risk policy, there’s one main downside, and it’s predictable. Because all risk policies are more comprehensive than other types of insurance policies, they also tend to be a bit more expensive. With insurance you pay for what you get, and that’s certainly the case with all risk policies.

Are all risk policies set in stone or can they be adjusted?

It depends on the homeowners insurance company that you’re working with. Many insurance providers allow you to add or subtract exclusions from your all risk policy. Other companies have a set list of exclusions for any all risk policy. However, those companies will usually allow you to purchase a rider on the side to cover most of the excluded perils that you want.

Can you have just some entities covered in an all risk policy?

Yes. Most homeowners insurance companies will allow you to have an all risk policy for some entities, and a named perils policy for others. For instance, you can usually opt to have an all risk policy for home damage, but a named perils policy for personal property protection.
One of the keys to finding the right homeowners insurance policy for you is to know what the terms are. An all risk policy may or may not be right for your needs, but it is a great type of coverage to have.

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