What Is All Risk Insurance?

All risk insurance is a type of insurance coverage that includes a provision for providing benefits for just about any type of loss or event that is not specifically excluded within the terms of the contract. Insurance plans containing an all risk clause are often provided to companies that move cargo over land or water, such as marine cargo insurance. Unlike other contracts that focus on identifying specific events that are covered under the terms, all risk insurance specifies events that are not covered by the contract and will not result in any type of disbursement if a claim related to any of those events should be filed.

One of the most common examples of all risk insurance is found in the coverage provided for companies who transport marine cargo. The text of the insurance contract will typically state that losses are covered up to the monetary amounts listed in the contract for any event that may take place, other than those specifically named. The decision of which events are specifically excluded from coverage will vary, based on the probability of those events taking place over the course of the all risk insurance plan. For example, the terms may specifically exclude wind or water damage that is the direct result of a hurricane or tsunami. Many plans of this type will include events related to piracy and theft, loss of market during the transport of the goods, wars or other types of civil disturbances, or the occurrence of strikes or riots that delay the transport.

While the structure of an all risk insurance plan may be somewhat restrictive on specific events, the coverage is also often considered very broad. The end result is that as long as an unanticipated event that is not excluded by the terms takes place, the transport company and the owner of the goods in question are likely to recoup all or at least a significant portion of the loss. This can be extremely helpful in a number of situations, since the insurance will often make it possible to avoid the severe financial hardship that would ensue otherwise.

When attempting to purchase all risk insurance, the idea is to lock in terms that exclude as few events as possible, while still keeping the cost of the coverage within reason. To that end, providers will often work with customers to identify what type of premiums are necessary to convince the insurer to take on the risk associated with covering a specific event. As with any type of insurance plan, more comprehensive and inclusive all risk insurance will cost considerably more than a basic plan that excludes a wider number of high-risk events.