What would YOU choose? Just burgers, or a set with fries and a drink? Unfortunately, for the burger we will not continue the conversation, but it is quite similar with the choice of insurance. Have you heard this terminology before? - Named risks coverage and All risks coverage? In general, these terms are most often used when talking about CASCO insurance policy or real estate insurance. You can tell from the name that it is one the content of the policy is superior to the other, but then what is compensated and what to consider when choosing one of these covers, read more in this article.
In short, these two types of coverage could be described as follows:
- Named risks coverage refers to specific risks that are covered by this policy
- All risks cover compensates for any risk that occurred, except for those mentioned in the "Exceptions" section of the rules.
Even here it calls for a more detailed narrative. Let's use real estate insurance product as an example.
Coverage of named risks
When purchasing an insurance policy, it is important for you to know exactly what this policy will cover when an accident occurs. You can see the insured risks in your policy printout. In the coverage of named risks, usually, the risks that are compensated are specifically considered, for example:
- Fire damage
- Storm, hail, lightning
- Accident of water and sewage systems
- Earthquake
- Unlawful behavior of third parties
This means that in the event of an accident that is not related to any of these named risks, the policy damages will not compensate. For example, if your property will suffer from rainwater entering the premises through wall joints and will cause damage to the interior decoration, then the policy will not compensate the specific losses, because such a risk as "Damage caused by rainwater" is not included in the coverage of the said policy for the named risks. So, the polsies coverage of the named risks covers only specific events that are classified under for the named risks.
All risk coverage
If with the named risk coverage everything is specific and clear, then with ALL RISKS coverage it is a little more complicated. Essentially All risks coverage fully covers any accident, event that occurs during the policy period, because in this there are no specific named risks in the coverage. So if you have bought an All Risks policy and the same thing happens with rain water entering the premises, then the policy will cover these losses. Although ALL RISKS are written in the title of the coverage, there are such things that the policy will not compensate, but such exceptions will always be clearly stated in the policy that the insurer sends you. Therefore, be sure to familiarize yourself with the terms of each insurer's specific product, where you look for the "Exclusions" section.
For example, the finish color of your home has changed over time, it has become duller and the plaster has already fallen off here and there. This will not be an insurance case and the insurers will not pay you for repainting the house, because it is natural wear and tear and the impact of the external environment on the object over time, which, quite understandably, is not sudden and unpredictable an event. In the exception section, everything that is not compensated is specifically listed.
If something that is not mentioned in the Exclusions section has happened to you and your insured property, and you have purchased ALL RISKS policy, then this risk policy should compensate and cover losses.
Why choose Named risks cover at all when you can buy the most complete cover?
Usually named risk policies are much cheaper than All Risk policies, the difference can reach up to 40% of the insurance premium. Insurers have there are enough insurance programs to fit everyone's needs, and very often you can choose which risks to include in the policy and which not, thus completing the most suitable home insurance policy for you (also in terms of price).
How to understand if an incident/accident that happened to your property is compensated at all?
Get to know the policy for written risks, if you have an All Risks policy, call the insurer and apply for compensation. If something doesn't work the compensated insurer will inform you about it.
Since it is not possible to predict what risks could harm your property in the future, we recommend choosing the most comprehensive insurance cover ALL RISKS.
Comprehensive insurance policies can be more expensive than the basic cover, or named risks policies because of the amount of coverage they provide. It is important to assess your risks and resources before deciding on the most suitable type of insurance for you. Before purchasing, always take the time to read and understand the terms and conditions of any insurance policy exceptional cases.
Finally, while All Risks insurance covers a wide range of risks, it does not mean that it covers all possible risks that may happen to the property or vehicle. There are still specific exclusions depending on the specific policy and insurance provider. Always find out what is covered and what is not covered by the specific insurance policy and compare different options from both your own and other insurers.
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