- In Cyprus, many companies promote their (most often Property) policies as “All Risks”. At first glance, one would believe that their policy covers their property against every possible risk. The author of this article has been wondering for years now – has the insurance industry, operating for centuries now, not identified every single risk which threatens every home and every property? Have they not managed to name the risk – so that it can be numbered on a policy, selected by a client and include their own possible conditions/ exclusions? Is it a real thing – are companies selling their product to their client, essentially assuring them that whatever loss or damage beholds you, they shall cover it, wherever it comes from? Doesn’t this sound an implausible scenario, given that an insurance policy is actually a contract, and a contract contains terms and conditions, exclusions and warranties, and if the industry can provide a real All Risks Policy, there would not even be a reason for a Policy – one could obtain a cover note, with only necessary info, a period of insurance, sums insured and/or limits of liability, and a premium. The simplest All Risks cover ever.
That never happens though, and there are reasons.
- Perils are unforeseen events that occur and cause losses or damage to property. They have been identified, they are Named Perils on a Policy and they each come with their own subjectivities.
- If a Policy promises to compensate in the event “anything” (any Peril) occurs, it has to come with a very wide and complicated list of exclusions. Insurance companies are profit-making corporations and are not in the business of paying compensation for whatever befalls a property. The list of exclusions is much more complicated from a simple reading of the Named Perils covered under a Property Insurance Policy.
- Most likely, apart from the Basic Perils that are named under a non-All Risks Policy, there are optional Covers, and if one has a look at any such Policy, there are a lot of options to choose from. Selecting Named Perils that are appropriate for a policyholder, creates the kind of flexibility and personalization of an Insurance Policy, which in turn, will create a range of covers that are actually necessary and relevant to the property to be insured. An All Risks Policy, given its restrictions, might provide cover for more events – but restrict it to actual essential ones.
- In the event of a Claim, the Perils Insurance Policy turns into clear and straightforward. The policyholder informs the company of an occurrence, and the procedure thereafter is simple. What happened, how it happened, the cause identified as a Peril that may or not be covered and Named under the Policy, and there follows a loss adjustment. If we have a claim under an “All Risks Policy”, there are two options – look through the exclusions to the whole Policy (rather than those applicable to the one Peril) and interpret those, or just pay out blindly (a utopian scenario).
- FOOO FOR THOUGHT! We have been reading, seeing, experiencing the effects of Climate Change (and other extreme/ bizarre activity) on the whole Planet. Is it possible, that there are risks around us – due to climate/ weather or other factors that might one day materialise and cause damage to property? If there are – the All Risks Policy, the authors of which had not even known about such a peril – will then have to compensate, they have not excluded a risk they never knew existed.
- ALL RISKS POLICIES ARE PROVIDEDI IN THE INDUSTRY – REAL AND RELIABLE!
- Our Company has an All Risks Section in their Home Insurance. It covers loss or damage whatever the cause. Example: Claim – “I lost my watch, no idea when or where”. As long as said watch was declared, with a Sum Insured, on a Proposal Form, no questions asked, the policyholder will be compensated for the amount insured. Guarding against fraud, such cover is provided only after assessment of moral hazard.
- Contractors’ All Risks Insurance – covers all material damage, without identifying the peril, as damage during construction is common, and the usual suspects of Named Perils (fire, earthquake, explosion etc.), do not usually factor in. Building is dangerous per se, so there is no need to identify the actual cause. Machinery and equipment used for constructions are always prone to damage, and/ or causing damage to the work being constructed. Searching for a peril that is named would be futile. Construction is also dangerous per se for workers – the issue in the cause of injury is identification of the party at fault. That is the reason that CAR is named “All Risks” – it is complicated to located an actual cause for damage at a construction site. But that does not mean that there are no exclusions applicable.
- EXCLUSIONS APPLICABLE IN EVERY INSURANCE POLICY WHATEVER ITS NAME
Whether your Insurance Policy is named “All Risks”, “Comprehensive”, “Complete”, “Combined”, “Basic” or any title any company selects to differentiate themselves from competition, there is no insurance policy that will cover the following (and these are just examples):
- Wear and Tear: Damage resulting from the gradual deterioration or normal wear and tear of the property.
- War and Terrorism: Damages caused by acts of war or terrorism and related events
- Intenntional acts: Loss or damage arising from intentional or criminal acts of the insured.
- Nuclear Hazards: Loss or damage due to nuclear reactions, radiation, or contamination.
- Pest Infestations: Damage caused by pests such as termites or rodents.
- So – can someone claim that they have an “ALL Risks Insurance Policy”?
- THE TRUTH!
“All Risks” is just a fancy name devised for advertising/ promotion purposes. Such a Policy does not exist. It can, indeed, be a very Comprehensive Policy, providing a wide range of covers and ensuring the best protection for property – both for homes and businesses. But the term “all” will be misleading, and in the writer’s opinion should have been abandoned. We value the customer who reads their wordings – those are the policyholders that are aware of their Named Perils and the terms/conditions/exclusions that apply to them. Our advice to the consumer is – be suspicious of anything containing the word “all” – choose “comprehensive” or something to that effect. Always read your Policy, speak to your selected insurance professional, choose what you need covered, ask questions! In our industry, like in any industry, not unlike mostly everything in the world – not everything is what it seems – the saying “ότι δηλώσεις είσαι πλέον” comes to mind!
