All-Risks Coverage

Named-perils policies list the causes of loss that are covered, such as fire or theft, and pay only when damage comes from one of those listed events. All-risks policies reverse this logic: everything is covered except the listed exclusions, which commonly include wear and tear, war, deliberate damage and gradual deterioration.

The burden often shifts to the insurer, which usually has to show that an exclusion applies. All-risks cover usually costs more than named-perils cover but leaves fewer gaps, so for owners, reading the exclusions list carefully is the key to knowing what is really covered.

Start with the schedule of property and interests insured, because a broad peril clause is of limited use if the damaged equipment was never declared, sat outside the insured location or belongs to another party. Check limits, sublimits, valuation basis, waiting periods and deductibles alongside the exclusions, since a theft sublimit, for instance, can reduce payment even when theft itself is covered.

A policy may distinguish the cost of replacing an asset from its depreciated value. If a machine would cost $80,000 to replace but is insured only at its old book value, the policy can leave a large funding gap, and an average or coinsurance clause can reduce a claim if declared values are too low.

Review values after buying stock, moving equipment or expanding a site, not only at renewal. Business interruption is a separate concern, because property damage may stop production while all-risks property insurance does not automatically cover lost revenue or extra operating costs.

Even with a business-interruption section, cover may depend on an insured property event, a waiting period, a maximum indemnity period and documented financial loss. Ask what would pay wages and rent while repairs happen.

Compare the wording against plausible events at each site, since fire, flood, machinery breakdown, accidental damage and power surges can each be treated differently. A broad form may still exclude gradual deterioration or faulty workmanship, and optional extensions carry their own limits.

After a loss, the insured may need to show physical damage, so make the site safe, notify as required, preserve evidence and keep an asset schedule, photographs and repair records, because proof rules depend on governing law and the policy wording. The worked payout of $75,000 on $80,000 of damage less a $5,000 deductible assumes the whole loss is insured, the property is within the policy limit and no other term reduces payment.

If the loss is excluded or the sum insured is inadequate, that simple calculation no longer predicts the cheque, so it is a budgeting illustration rather than a claim settlement promise. Write down the scenarios you most need covered, have the facility team review the exclusions, and ask a broker to compare the signed wording with those risks, because the wording matters more than a brochure label.