Building Your Business Business Insurance What Is All-Risk Insurance? Open-Perils Insurance Explained in Less Than 5 Minutes By Sabrina G. Anwah Sabrina G. Anwah Website Sabrina G. Anwah is an entrepreneur and founder of D.C.-based creatives services and communications firm, Words Into Hype. She works with clients to improving their business visibility and increase their revenue by evaluating their goals, identify their strengths, target the appropriate audiences, and produce attention-getting, intriguing and accurate content. Sabrina covers small business, entrepreneurship, and business finance topics for The Balance. learn about our editorial policies Published on November 21, 2022 Fact checked by Jane Meacham Fact checked by Jane Meacham Twitter Jane is a freelance editor for The Balance with more than 30 years of experience editing and writing about personal finance and other financial and economic subjects. learn about our editorial policies In This Article View All In This Article How All-Risk Insurance Works Example of All-Risk Insurance Types of All-Risk Insurance Frequently Asked Questions (FAQs) Photo: kate_sept2004 / Getty Images Definition All-risk insurance covers a wide range of property losses, except for those that are specifically excluded in the policy. If you own a home or a small business commercial property, you may be quite familiar with your property insurance coverage, but you may not be aware of all-risk, now more commonly known as open-perils, property coverage. All-risk, or all-risks, insurance covers a range of property losses, with the exception of those specifically named for exclusion in the policy. This is in contrast to the standard “named perils” insurance, which specifically lists losses that will be covered. The insurance industry is moving away from use of the term “all risk,” as it can be confusing to consumers. “Open perils” and “special perils” are now more commonly used instead. A peril is an unexpected occurrence, such as a thunderstorm, that can cause property damage or loss. Key Takeaways All-risk insurance covers a wide range of property losses, except for those that are specifically excluded in the policy.The insurance industry is moving away from the use of the term “all risks” because it can be confusing to consumers; “open perils” and “special perils” are being used instead.A peril is an unexpected occurrence, such as a thunderstorm, that can cause property damage or loss.Standard home and property insurance policies are usually “named perils” and typically cover damage or losses caused by acts of nature, fire, vandalism, or theft that are clearly listed as covered occurrences in the policy.All-risk and named-perils insurance both have coverage limits, so it is best to customize your property policies based on your own personal and professional needs. How All-Risk Insurance Works Standard home and property insurance policies usually are named-perils policies, and typically cover damage caused by hail, snow, ice, windstorms, and other acts of nature as well as losses due to fire, vandalism, or theft. These will be clearly stated as covered in the policy. Coverage for flooding or earthquake damage is usually not included in these policies, but coverage for these events can be purchased in addition to the standard policies. Named-perils policies often also include some liability coverage should someone be injured on your property. With an open-perils policy, all storm-related losses to a dwelling or other structures, such as fencing, a guest cottage, or a detached garage on your property, would be covered from loss unless those structures were specifically listed as exclusions in the policy. You also can purchase a combination of the two types of policies. Example of All-Risk Insurance To illustrate the difference between the two options, let’s look at an example. Two small business owners have commercial properties. Both properties are damaged when a powerful hailstorm comes through their town. The first owner has a standard named-perils policy that lists hailstorm damage as a covered peril. Therefore, damage to the property’s roof is fully covered. The second business owner’s property, which is covered by an all-risk or open-perils policy, also has damage to the roof. However, the fence surrounding the property was also bent and damaged by the storm. The roof was damaged, the building was uninhabitable, and employees were not able to work for two days. The damage to the roof, the damage to the fence, and the employees’ lost wages would be covered under the all-risk or open-perils policy unless they were specifically listed as exclusions in the policy. Because of the expansive nature of the open-perils coverage, you can expect to pay more for these policies. Types of All-Risk Insurance Some all-risk or open-perils insurance policies have limits. For example, they may not cover damage caused by mold, flaws in the foundation of a home or building, normal wear and tear, floods, earthquakes, or sewer backups. Named-perils policies may be less expensive, but it is important for you to know the specific perils you are insured against, as some policies will only cover a single event, so you may be left at risk of paying for expensive repairs and replacements. Note You can purchase personal property endorsement, or floater, insurance for the appraised value of expensive items you may own, such as fine jewelry, artwork, collectibles, and silverware. These limits to both options point out the need to customize your property policies based on your personal and professional needs. Types of additional insurance coverages to consider include: Loss of use coverage: Covers hotel fees if the property damage prevents you from being able to stay at home or use your workplace Personal property coverage: For damaged personal items such as clothing and electronics Personal liability coverage: Protection for legal action taken against you or a family member Dwelling coverage: Covers the repair or rebuilding of your home or office Other structures coverage: Covers other structures on the property such as sheds, fencing, or a detached garage Frequently Asked Questions (FAQs) Why should a small business owner consider open-perils insurance? Open-perils insurance covers a wide range of property losses your business may experience, with the exception of those specifically excluded in the policy. So it provides broader coverage that could save you money if you experience loss or damage with more than one cause. What are some types of damage or natural disasters covered in named-peril policies? Standard named-peril home and property insurance policies usually cover damage or losses caused by acts of nature, fire, vandalism or theft, as long as they are clearly listed as covered occurrences in the policy. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Insurance Information Institute. “What Is Covered by Standard Homeowners Insurance?” Travelers. “Home Insurance Coverage.”