What is All Risk Insurance?

There are a lot of different types of insurance on the market today. These are all designed to cover you and your possessions in a wide variety of circumstances. The various types of car insurance ensure that you are looked after and are able to fix or replace your motor vehicle if you are in an accident or your car is stolen. Household insurance protects your home and the contents of your home from theft and unforeseen disasters like fire and flooding. All risk insurance is another form of insurance and it is worthwhile considering buying, especially if you travel all over the country a lot (whether for work, family reasons or because you enjoy the open road).

All risk insurance defined

All risk insurance covers you for items that are normally taken out of your home when you go places – items such as cameras, handbags, cellphones and jewellery are normally worn and carried on you because this is when you are most likely to use these possessions. South African insurance companies will normally offer you a choice between two types of all risk insurance, unspecified all risk insurance and specified all risk insurance. Which type of all risk insurance you decide to buy depends on the value of the items you normally carry around with you outside of your home.

The term ‘unspecified all risk insurance’ is somewhat misleading as it will cover you for items up to a certain amount, for example R2000. If your possessions are worth more than R2000 (perhaps you are a photographer and have very expensive equipment) and they get stolen, you will only be paid out R2000, even if the possessions that you need to replace are worth R20 000. Unspecified all risk insurance is ideal if you would just like to ensure that if your wallet and cellphone or the contents of your handbag.

Given that the term ‘unspecified all risk insurance’ only insures you up to a certain amount, the term ‘specified all risk insurance’ is fairly straightforward and lets you decide how much your possessions are worth and what they should be insured for. If you are a photographer and spend most of your time on the road keeping the rest of the world informed about what is happening, then your equipment is more than likely going to be worth a lot more than R2000. Perhaps you travel a lot and constantly have the latest Ipad and Kindle with you. In this case, it is also advisable to get specified all risk insurance.

A word of warning

The term ‘all risk insurance’ can be misleading at times. Even though it is the broadest type of insurance cover, all risk insurance typically excludes losses due to inferior quality packaging, loss of market and similar issues. All risk insurance policies generally will not state which risks are covered by the insurance policy, but will have a list of risks which are excluded. It is important to go through this list of exclusions as carefully as possible so that you do not end up with any unpleasant surprises later on. A general rule of thumb is that if it is not on the list of exclusions, the insurance policy will cover it. If there is anything that you are not entirely sure about, contact the insurance company and ask. They should be happy to assist you.