All risks coverage is a form of property, marine or specialty insurance that pays for loss or damage from any cause unless the policy specifically excludes it. It is also called "open perils" or "all perils" cover. Instead of listing the events that are covered, such as fire or theft, the policy covers everything and then lists the exceptions. Businesses, homeowners, shippers, art collectors and some crypto custodians use it to protect valuable assets.
All risks coverage is the main alternative to named perils coverage, which pays only for causes listed in the policy. Despite the name, it never covers literally every risk: every policy has exclusions, limits and conditions. The difference lies mainly in who has to prove what when a claim is made.
All risks coverage in plain terms
Imagine two kinds of guarantee on a new bicycle. The first says: "We will fix it if it is damaged by fire, flood or a falling tree." The second says: "We will fix it whatever happens, except if you race it or leave it out in the rain on purpose." The second is all risks cover. You are protected against surprises nobody thought to list.
The small print still matters. The list of exceptions can be long, and some common problems, such as wear and tear or slow damage over time, are almost always left out. All risks cover is broader, not unlimited.
How it differs from named perils cover
| Feature | All risks | Named perils |
|---|---|---|
| What is covered | Any cause not excluded | Only listed causes |
| Burden of proof | Insured shows a loss happened; insurer must show an exclusion applies | Insured must show the loss came from a listed peril |
| Premium | Usually higher | Usually lower |
| Unexpected causes | Generally covered | Generally not covered |
The shift in the burden of proof is often the most valuable feature. Under an all risks policy, the policyholder generally needs only to show that a fortuitous loss occurred during the policy period; it is then up to the insurer to prove that an exclusion applies.
Common exclusions
Typical all risks policies exclude some or all of the following:
- Gradual deterioration. Wear and tear, rust, rot, insects and inherent defects.
- Intentional acts. Deliberate damage or fraud by the insured.
- War and nuclear risks. War, terrorism (unless added back) and nuclear contamination.
- Natural catastrophes. Earthquake and flood are often excluded or sub-limited, with separate cover such as flood insurance needed.
- Mechanical and electrical breakdown. Usually covered under separate equipment policies.
- Mysterious disappearance and inventory shortages. Losses discovered only during stocktaking.
- Cyber losses. Increasingly excluded from property policies and moved to dedicated cyber cover.
Uses in marine, cargo and specialty insurance
The concept has deep roots in marine insurance, where the Lloyd's market developed standard cargo clauses. The Institute Cargo Clauses (A), widely used in international trade, provide all risks cover for goods in transit subject to listed exclusions, while the (B) and (C) clauses give narrower named-perils cover. Fine art, jewellery and specie policies, which cover cash, gold and other high-value items in vaults or in transit, are commonly written on an all risks basis. These specialty markets are also where some cover for digital assets has developed.
All risks cover and crypto custody
Some digital asset custodians buy specie-style policies that cover theft of private keys held in cold storage, sometimes described as all risks within the vault. In practice, crypto policies are narrowly drafted: they often exclude losses from hot wallets, insider collusion beyond certain limits, smart contract failures and market price falls, and total limits are small compared with assets held. Customers reading a custodian's statement that funds are "insured" should check the type of cover, the limit, the exclusions and whether customers or only the custodian can claim.
Claims and limitations
Even under all risks cover, payment is limited by the sum insured, indemnity limits and the excess or deductible. If property is insured for less than its value, the insurer may reduce the payment under an average clause, a common problem described as underinsurance. Disputes often arise over whether a loss was sudden or gradual, and over how exclusions apply when several causes combine. After paying, insurers usually take over the policyholder's right to recover from third parties through subrogation. Buyers often work with brokers to compare wording, because two policies both called all risks can differ widely in practice.