An all-risk property insurance policy means that the policy will cover everything, expect the perils which are clearly listed under the exclusion head. It means, if something is not specifically excluded from the all-risk property insurance policy, it would be covered by the insurer.
Often known as a comprehensive insurance policy, an all-risk property insurance policy offers you coverage in the event of those losses or damages which arise due to perils which you do not anticipate, i.e., those perils which do not fall under the named peril list. When a claim is filled, the property insurance company evaluates whether losses or damages are a result of events which come under exclusion head or not. If they are not, the insurer will offer the coverage.
Some of the coverages which are available under all-risk property insurance policy are burglary, fire, machinery breakdown, explosion, business interruption due to loss of fire, business interruption due to the breakdown of machinery etc.
Here, as the insurance coverage is extensive, the all-risk property insurance policy is costlier than the named perils insurance policy.
Though the all-risk property insurance offers comprehensive cover; there are certain events which are not covered under the policy, like –
- Deprecation or wear & tear
- Mechanical or electrical breakdown
- War and nuclear perils
- Loss or damages which happen during dyeing, cleaning, repairing or restoring
- Scratching, denting, or brittle substances
An all-risk property insurance policy comes with a compulsory deductible. It means at the time of claim; the insurer will not settle the entire claim amount, and a certain portion would have to be paid by the policyholder. It is called compulsory deductible. A policyholder can voluntarily opt for a higher voluntary deductible and get lower premium rates. As the policyholder agrees to share the portion of the claim, the insurer rewards him/her with easy premium rates.
In case of all risk property insurance policy, the insurer computes the sum insured as per the market value of the property. Further, it is feasible to extend the all-risk property insurance policy to cover electrical and mechanical breakdown events by paying the extra premium.
If a loss or damage happens, it is necessary for the policyholder to inform the insurance company immediately. Also, the policyholder should take all the steps to curtail the damages and recover missing property. It is necessary to inform the police if the loss is due to theft, burglary or willful damage.
It is essential to carefully read the all-risk property insurance policy to understand the fine print so that you can easily comprehend what is not included in the policy.
After working as a mechanical engineer with J.K Engineering, Ravish started his own business in Pune. He bought an office in one of the companies and started his business with 80 employees working under him. Considering the risks which could arise in the business, he also purchased all-risk property insurance policy which promised to offer comprehensive coverage against various kinds of losses or damages, like fire, burglary, explosion, etc. He paid an extra premium to get coverage for an electrical and mechanical breakdown as well.
As it is an all-risk property insurance, therefore, the insurer agrees to give comprehensive coverage and cover all the perils, provided they do not fall under the exclusion head.
It means, Ravish’s property insurance policy would give comprehensive coverage and cover all those risks or perils which are not listed in the exclusion head.
In case of any loss, Ravish can approach the property insurance company who would appoint a surveyor to inspect the extent of losses or damages. In case the loss would happen due to perils which are not in the exclusion head, the insurer would come forward and cover it as per the sum insured available under property insurance policy.