Which statement best describes All Risks coverage relative to exclusions?

Which statement best describes All Risks coverage relative to exclusions?

• A. It covers every risk with no exclusions.
• B. It is basically the same as a fire policy with EC.
• C. It has exclusions stated in the policy.
• D. It covers the same risks as the Named perils policy.

Answer: (C)

All Risks coverage is open perils: it typically covers everything except what the policy explicitly excludes. That’s why the best description is that exclusions are stated in the policy. The insurer is agreeing to cover a broad range of risks, but there are specific exclusions listed that define what is not covered. It isn’t simply “every risk with no exclusions,” because policies always carve out certain risks (such as wear and tear, latent defects, certain natural disasters, war, governmental actions, etc.). It also isn’t the same as a fire policy with extended coverage, which is a narrower, named-perils approach, nor is it the same as a Named perils policy, which only covers perils that are listed.

All Risks coverage is open perils: it typically covers everything except what the policy explicitly excludes. That’s why the best description is that exclusions are stated in the policy. The insurer is agreeing to cover a broad range of risks, but there are specific exclusions listed that define what is not covered.

It isn’t simply “every risk with no exclusions,” because policies always carve out certain risks (such as wear and tear, latent defects, certain natural disasters, war, governmental actions, etc.). It also isn’t the same as a fire policy with extended coverage, which is a narrower, named-perils approach, nor is it the same as a Named perils policy, which only covers perils that are listed.