Understanding Insurance: Assets All Risks Insurance Policy

2 Minutes Read

An assets-all-risks insurance policy covers accidental physical damage or loss to an insured property caused by a peril (cause) that is not specifically excluded in the policy wording.

This means that the policyholder can make a claim under the policy for an accidental physical damage or loss that occurs to the insured property as a result of any cause provided the cause is NOT explicitly excluded in the policy.

The perils covered under this policy include fire, flood, storm damage, theft, lightning, explosion and other accidental causes. There are certain types of causes that are typically excluded from Assets All Risks policies and they include the following:

• Earthquake.
• Wear and Tear.
• War.
• Nuclear hazard.
• Pollution.
• Infestation.  

Some assets that are typically insured under this type of insurance policy include Plant and Machinery, Buildings, Fixtures, and stock (inventory). Due to the comprehensive nature of the All-Risks insurance policy, the premium on this type of policy is usually higher than other more restrictive types of policies.

What to look out for

As stated above, an Assets All Risks policy will typically have a list of “Exclusions”, which are perils (causes of physical damage or loss) for which the insurer will not pay a claim under the policy. It is therefore imperative for the entity buying the insurance (or their insurance representative) to read the exclusions section of the policy very carefully. One also needs to note that some of the perils excluded can be included in the policy by paying an additional premium to the insurer.