What is the difference between a Named perils insurance policy and an All risk insurance policy?

Answer 1

Standard Homeowners Policy Verses All Risk Policies

Most Homeowners Insurance Policies are "Named Risk". They list all the covered perils for which the Insurance company will offer coverage. So If It is not on the list, It basically is not covered.

An All Risk Policy is just the opposite. It lists all the perils that are "not" covered, On these policies if it is not on the list, then it "is" covered.

Answer

A named perils policy only covers perils listed in the policy. For example, a named perils policy will usually cover an accidental fire loss at your home because fire is listed as a covered peril. However, lets say you have a water loss at your home when a water line breaks. If water loss is not listed as a covered peril under your policy, then you will have to pay for the damage yourself, which can be expensive. For a named peril policy you need to look at the the policy to see what perils are covered.

On the other hand, an all risk policy will cover any peril unless its specifically excluded under your policy. An all risk policy provides you more coverage than a named peril policy. For an all risk policy you will look to the Exclusions section of the policy to determine what is not covered. In the water loss example above, unless water losses are specifically excluded under the policy, the loss is covered.

An all risk policy will cost you more in premiums, but is worth the price.