When placing insurance on your property, whether it be your home or business, it is important to note what type of coverage you are purchasing: Named Perils or All Risk?
A Named Perils insurance policy covers only what is specifically noted on the actual policy, whereas an All Risk insurance policy will cover all losses subject to any exclusions.
The perils that are commonly insured under a Named Perils policy are as follows:
1. Fire or lightning.
2. Explosion (not including water hammer).
3. Smoke (due to a sudden, unusual and faulty operation of any heating or cooking unit in or on the premises).
4. Falling object (a falling object which strikes the exterior of the building).
5. Impact by aircraft, watercraft or land vehicle.
6. Riot.
7. Vandalism and malicious acts (does not include loss or damage caused by theft or attempted theft).
8. Water damage (loss or damage caused by water as defined in Specified Perils).
9. Windstorm or hail (does not include loss or damage to your personal property within a building, caused by windstorm, hail or coincidental rain damage unless the storm first creates an opening in the building).
10. Transportation (loss or damage to your personal property while it is temporarily removed from your premises caused by collision, upset, overturn, derailment, stranding or sinking of any automobile or attached trailer in which the insured property is being carried).
11. Theft, including damage caused by attempted theft.
12. Building collapse (loss or damage arising from the collapse of part or all of your dwelling building, including collapse caused by the weight of ice, snow or sleet).
13. Electricity (sudden and accidental damage from artificially generated electrical current).
14. Fuel oil escape (damage to your personal property from fuel oil caused by the bursting or overflowing of a domestic fixed fuel oil tank, apparatus or pipes).
When coverage is on a Named Perils form, in the event of a claim it must be proven that a named peril caused the loss in order for coverage to apply. With an All Risk policy, all damage or loss is covered unless the Insurer can prove that it is excluded. As well, Named Perils policies often do not provide Replacement Cost coverage for contents or Guaranteed Replacement Cost for buildings. Named Perils insurance policies often offer lower miscellaneous limits (i.e. food freezer coverage, student residence property, etc.) and many coverages that are automatically included with an All Risk policy are required to be purchased separately for an additional premium.
When comparing the two types of policies, a Named Perils policy does not offer a huge amount of premium savings but the difference in coverage can be significant. Some types of properties (such as vacant dwellings) maybe not be eligible for All Risk coverage, however if the option is available to purchase All Risk we highly recommend it. We want to ensure you are covered as best as possible. The premium may be slightly higher for an All Risk policy, but well worth it if there is a large loss to your property that might not have been covered on a Named Perils policy. If there is a mortgage or line of credit on the property, an All Risk insurance policy would most likely be required as well.
If you have any questions regarding your property insurance policy, please do not hesitate to contact our office and we would be more than happy to assist you!
Thank you,
The Costen & Associates Team
