All Risks Policy
All Risks policy is a kind of Insurance Policy where only specific exclusions as mentioned in the contract is not covered by the insurance company, else all kind of risks apart from the previously mentioned exclusions are covered for the entity insured.
Generally, the terms and conditions agreed between the insurer and the insured are detailed in the insurance contract, which is a part of the policy document. The details of premium, the risks covered, etc are mentioned in the policy document. The document also mentions the type of risks that are not covered, or in other words, the conditions for which the insurer is not liable to pay are mentioned in the document.
By all risks policy, it is meant, that all other risks/perils which are not specifically omitted/exempted in the policy document are covered by the insurer.
Simple Illustration with Example
For example. If Mr.Amit has opted for a insurance cover on his property and his property has been damaged due to flood in his locality.
The insurance cover has not mentioned “damage due to flood” in its exemption list. So, by default or going by the “all risks policy”, his property is insured against floods and the loss faced by Amit must be compensated by his insurer to the extent of the terms agreed while entering into the contract.
To keep their liability limited, insurers have brought about different clauses and lists to broaden the conditions of exemptions. On the other hand, the insured must read the clauses carefully to broaden their coverage.