Insurance on Property - 2.7

a) What is the major difference between how coverage under a named perils policy and an all risks policy is determined?
b) State the types of exclusions found in all risks policies and give an example of each.

Answer:

a) A named perils form responds only to loss caused by perils identified specifically in the policy. To recover under such policy, an insured must show both that property damaged or destroyed was insured property and that the cause of the loss was a listed peril.

An all risks form insures any fortuitous loss unless the proximate peril is exclued specifically in the policy. To recover under such policy, the insured must show that the property damaged or destroyed was insured and that the loss arose from a fortuitous and not inevitable risk. The insured need not prove the loss is covered, the onus is on the insurer's side.

b) All risks policies have the following types of exlusions,

1. Types of property; for example, money, securities, aircraft, watercraft.
2. Types of loss; for example, loss arising from delay, loss of market, or loss of use or occupancy.
3. Types of risk; for example, loss by misappropriation, conversion, infidelity or dishonesty of any person to whom property is entrusted.