Does your all-risk homeowners insurance provide coverage for all types of damages that may happen to your home? We know that this type of insurance comes with a pricier premium, but is it worth paying the high price? Find out if it is best to the all-risk homeowners insurance can provide you with the peace of mind that you need when it comes to your home.
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What Is An All-Risk Homeowners Insurance?
The all-risk homeowners insurance is the type of coverage that covers all types of losses, except where it is explicitly stated as an exception. While the name suggests that every type of loss is covered, it isn’t normally the case. Since the name “all-risk homeowners insurance” can be misleading, insurance companies try to stay away from using this term. However, the proof of proving that the loss isn’t covered falls on the hands of the insurance company.
Since insurance companies won’t cover for all types of losses, it is their responsibility to list down all of the exceptions to the coverage. Some of the most common exceptions to this coverage are the damages caused by, but not limited to, “earthquake, war, government seizure or destruction, wear and tear, infestation, pollution, nuclear hazard, market loss, etc.”
The exception isn’t limited to the cases stated above. Other insurance companies go the extra mile to list more exceptions to an all-risk insurance policy. In this instance, it is best to get an umbrella policy for these exceptions, especially if the likelihood of the occurrence of this case is quite high in your area. For example, if you live in a flood-prone area, it is important to make sure that your insurance policy covers flooding.
All Risk Homeowners Insurance vs. Named Perils Insurance
Contrary to the all-risk homeowners insurance, named peril insurance provides coverage for damage losses that are explicitly stated in the contract. In this case, the responsibility to prove that the loss is covered by the policy falls on the hands of the insured. Since this is the case, the premium to be paid for a named peril policy is cheaper than an all-risk homeowners insurance.
Here is a situation that explains the difference between these two insurance coverage policies:
You are playing catch with your child outside the house when the ball accidentally hits the window and the glasses shattered. Will this be covered by my insurance policy?
When you have an all-risk homeowners insurance, the insurance company should be liable for paying the damages, unless an exception related to this occurrence is explicitly stated in the contract.
On the contrary, if this case isn’t specifically stated in a named perils insurance coverage, the insurance company wouldn’t cover for the damage. In this case, the burden of proof lies in the hands of the insured. It is their job to prove that the loss claim is valid.
Should I get an All-Risk Homeowners Insurance Policy?
Truth be told, getting an all-risk insurance policy is very expensive. However, if you feel like the risk for loss is quite high in your area, it may be safer to get an all-risk insurance policy to ensure that your finances are protected against potential damages.
If you know that the risk is low for damages relating to non-fortuitous events, it may be wise to opt for named peril insurance. The next best thing to do is just add an umbrella policy to your coverage. You can do your research by finding out the most common type of claims filed in your neighborhood. If your neighborhood has a high case of theft, you must make sure that your coverage includes protection against theft.
On the other hand, if you know that you will need more comprehensive coverage, it is better to get an all-risk insurance. You just need to be wary of the exclusions that your insurance company will list. It will be harder to make your insurance company liable if the exclusions are already explicitly stated in the contract.
To conclude this article, you may be wondering, is an all-risk homeowners insurance a good deal? The answer is subjective on the location and condition of the property and the price you are willing to pay for premiums. However, if the exceptions stated on the policy are far and few, an all-risk homeowners insurance might be a worthy investment.