What is an All-Risk BOP?

When choosing a business owners policy (BOP) to insure your business, it’s very important to dig into the details of the plan. Your policy will define the loss scenarios during which they will offer you coverage; however, they won’t often cover every conceivable loss that you might experience. Therefore, it helps to review the fine print.

If you want the most comprehensive level of coverage available within most BOPs, then it helps to choose an all-risk BOP, sometimes called an open-peril BOP. Here’s how it works.

What is All-Risk Coverage?
Your BOP’s property insurance will agree to cover you against unexpected, unavoidable damage to owned property (stock, equipment, furnishings, etc.) within your business. Common causes of property damage might include fires, severe weather, man flipping over and open sign

vandalism or theft and most property benefits will insure you against these perils.

However, when you take out an all-risk BOP, you will find that you have a coverage for a very expansive list of perils. The policy is written in a way so that it will cover every type of property damage that is not specifically excluded by the wording within the BOP. Therefore, unless your policy explicitly says it won’t cover a certain loss, then you will be able to file a claim.

This benefit provides a significant expansion of coverage compared to its opposite, named peril coverage. Under a named peril plan, your policy will only cover a specific list of hazards, with every other potential loss excluded. Therefore, an all-risk plan will prove much more to your advantage in cases of very unexpected losses.

Should You Consider This Coverage?
By working with your insurance agent, you can take a close look at the property damage risks that are common in both your industry and community. Therefore, you’ll be able to get a better picture of whether you can benefit from an all-risk policy as opposed to a named-peril plan.

Here’s how to do so:

Compare both insurance policies from those offered by your choice of carriers.
Look for property damage exclusions within the named peril plan. Then, compare them to any exclusions within an all-risk policy.
If you see that a named-peril policy does not adequately cover the property damage that you are likely to experience, then consider asking your agent for an all-risk option.

Additionally, don’t forget to consider the costs of the different policy options. Though all-risk plans are often more expensive than named-peril plans, the extra investment is often well in line with the additional protection that you need. Therefore, you’ll often find this a better long-term investment, strategically speaking, and you will have to worry less about being caught in a property damage scenario for which you have no coverage.

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