An Overview of All-Risk and Named-Risk Homeowners Insurance

All-Risk Has Exclusions

Don’t take the designation all-risk literally – the coverage still has exclusions. Insurance policies, whether home insurance or otherwise, cannot cover every possible risk on earth. Otherwise, the cost of insurance would be unbearable.

However, all-risk insurance provides more comprehensive coverage than named-risk insurance. All-risk insurance only has a few exclusions. Below are the typical exclusions.

Normal Wear and Tear

Nothing stays forever. Wear and tear is inevitable. Insurance rarely covers inevitable losses. For example, asphalt shingles lose their granules over time due to normal wear and tear. Thus, home insurance doesn’t cover gradual loss of granules even with an all-risk policy.

Coverage Under Other Insurance

Your all-risk coverage excludes risks that fall under other insurance policies. That exclusion applies whether you have those insurance policies or not. For example, your all-risk homeowners insurance doesn’t cover your car – you still need auto insurance coverage for the car.

Unknowable Risk

Insurance companies deal with risks they can evaluate. Even an all-risk policy cannot cover unknowable risks, such as pandemics or nuclear wars. Further, if your property is close to the forest or areas with animal populations, the insurance may not cover any damage caused by them. If you have to perform varmint control or pest control, then the responsibility may be on you to get the problem resolved. Nevertheless, you can find out from your provider if this sort of situation is covered in an all-risk insurance.

A Policy Can Have Both Types of Coverage

One home insurance policy can include both named- and all-risk coverage. Some policies provide named-risk coverage for some properties and all-risk coverage for others. For example, your homeowners insurance can have all-risk coverage for the building structure and named-risk coverage for the building’s contents.

In such a case, the insurance company will evaluate your losses individually to determine which coverage applies. Say a tree falls on your house and damages the roof and your personal belongings – the all-risk coverage may apply to the roof and the named-risk coverage to the personal belongings.

The Burden of Proof Differs

Disagreements on coverage are possible between homeowners and their insurance carriers. In such cases, one party must prove why the coverage does or doesn’t apply. For an all-risk policy, the burden of proof is on the insurance company to prove why the policy doesn’t cover the loss. For a named-risk policy, the burden of proof is on you to prove that the policy covers your loss.

Consider a case in which a wild animal enters your home and accidentally damages your expensive artwork. If you have an all-risk policy, you expect compensation unless the insurance company can prove why your policy excludes the loss. With a named policy, the onus is on you to prove that your policy covers animal-related damage.

Premiums Differ by Coverage

Multiple factors determine home insurance rates. The standard factors include:

• Home size
• Location
• Building reconstruction cost
• Age of property



However, the same property will attract different rates for all-risk and named-risk insurance. All-risk coverage requires significant investment due to its comprehensive nature. Named-risk coverage tends to be more affordable because of its limited coverage.

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