3 Differences Between an All Risk and Named Perils Policy

Insuring your home is vital to your financial security and often compulsory when there is a lien on the home. This means you’ll sometimes be purchasing a homeowners insurance policy without really understanding all there is to it. You may be given the option to choose a named perils policy or all-risk, and knowing these main differences will help.

What’s Covered

In a policy that only covers for named perils, your home or its contents will only be insured for events like fire, windstorm, hail, lightning, and other disasters. All risk policies don’t rely on language to let you know what’s covered, but rather offer coverage for everything not excluded meaning the possibilities are almost limitless.

What’s Excluded

There is overlap between both policies in what they both exclude. For example, most policies don’t cover intentional acts, nuclear disasters, and war. However, since named perils policies are more specific in their scope, the additional exclusions narrow the coverage more.

What It Costs

All risk coverage tends to be more expensive than named perils coverage. Some customers feel they are paying for coverage they may never use. Also, many customers are comfortable with named perils policies since they sufficiently cover the types of natural disasters that befall a home in their geographic location.

Choosing what type of coverage to purchase for your home is sometimes confusing. However, knowing the difference between some choices will help you pick what’s best for your home and situation.