What is all-risks coverage?

NO10851PC answered 8 months ago …

"All Risks" is really an old insurance term originally used on Property Insurance policies. The Coalinga, CA earthquake of 2003 or 2004 brought a series of court cases that ruled in favor of property owners. The basic theory was that the "All Risks of Physical Loss" terminology was confusing to people even though the policy exclusions clearly spelled out what was indeed excluded. For example, Earthquake and Flood are two primary exclusions. In the Coalinga case, even though property owners knowingly refused Earthquake coverage, and didn't pay Earthquake premiums, the courts ruled that their policies were ambiquous and ruled in their favor citing the "collapse" peril as a "trigger" for Earthquake coverage. To make a long story short, insurance companies were forced to pay almost $1B in EQ claims even though they didn't collect one dime in EQ premiums for those particular claims. So, over the years the policy forms were changed, and the "All Risks" language was removed from most policies. Today, most property insurance policies are intentionally vague about what is covered but are more specific as to what isn't.