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Does ‘All Risk’ Insurance Cover More Than Named Peril? Not Necessarily |
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Monday Brief - 16 March 2009 |
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| by Gary Carroll |
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Over the past several weeks I have been involved in negotiating terms for several hull policies for clients considering purchasing an insurance policy on either an “all risk” basis or “named peril” basis. While “all risk” sounds appealing and all-inclusive I have cautioned clients to not assume that “all risks” policies cover ALL risks. Let’s look at some definitions.
A PERIL is a specific risk or cause of loss covered by an insurance policy.
NAMED PERIL insurance is a contract in which the covered perils are specifically mentioned as covered by the policy.
ALL RISK insurance contracts are contracts of insurance that cover direct physical loss to property insured unless the policy specifically excludes or limits the coverage.
Remember this: the most important part of an insurance contract is the part that tells you what is NOT covered. While all risk policies may sound like they provide broader and more comprehensive coverage for a vessel, without looking at the exclusions section of the “all risk” terms that may not be the case.
As an example: a popular all risk contract specifically excludes the following: ship’s cash; confiscation, detainment or arrest of the vessel; fines and/or punitive damages regardless of the cause of loss; chartering (skipper or bareboat) OR commercial use; motorized land vehicles; aircraft; etc…
For these items to be included, an all risk policy must be endorsed otherwise there is no coverage for these perils in spite of the fact that the policy is an “all risk” policy. Again: “all risk” coverage doesn’t mean ALL risks are covered.
It is vital to know the product and to make sure that product is consistent with the ownership and intended use of the vessel, otherwise in the event of a claim the owner could be out of luck.
For more information on this topic, contact CYA/Comprehensive Yacht Assurance at 954.604.2888 or info@cyacht.net. |
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Published with permission - www.cyacht.net © CYA/Comprehensive Yacht Assurance |
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