Perils-based policies vs all risks policies: Understanding the key differences

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By Jim Sales Account Executive

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When arranging insurance cover, it is important to understand the difference between a perils-based policy and an all risks policy. While both provide protection against loss or damage, they operate in different ways.

A perils-based policy only covers causes of loss that are specifically listed within the policy wording. By contrast, an all risks policy is generally designed to cover loss or damage unless it is specifically excluded. As a result, all risks policies can provide broader protection in certain circumstances, although the suitability of either approach will depend on the policy wording and an individual’s insurance needs.

For listed property owners, choosing the right level of protection is particularly important, as repairing historic buildings can be significantly more complex and expensive than repairing a standard home. As we explore in our article, Why value matters more than price when insuring a listed property, the cheapest policy is not always the one that offers the most suitable protection when a claim occurs.

Below are some key considerations when comparing the two policy types.

What is a perils-based policy?

Perils-based policies cover specific causes of loss or damage that are listed within the policy wording.

Because cover is based on named events, it is important for policyholders to understand exactly what is and is not included within the policy. Where a loss results from a cause that is not listed as a covered peril, the policy may not respond.

Insurers may need to establish whether a loss falls within a named peril and whether the policy conditions have been met before reaching a claim decision.

Depending on the policy wording, accidental damage may not be included as standard and may require an additional extension.

For some customers, a perils-based policy may provide an appropriate level of protection. Others may prefer broader protection depending on the nature of the risks they wish to insure.

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Why some customers choose all risks policies

An all risks policy generally provides wider protection by covering loss or damage unless the cause is specifically excluded within the policy wording.

This approach:

Can help provide broader protection against a wider range of insured events
Includes accidental damage as standard, unless specifically excluded.
Reduces the need to determine whether an incident falls within a specific named peril
Provides cover for certain unforeseen losses, subject to the policy terms, conditions and exclusions
Offers a simpler approach to cover and greater peace of mind for some policyholders

In most cases, all risk policies offer cover on a worldwide basis, so that your contents and valuables are covered away from the home, doing away with the “Personal Possessions” section of a standard perils policy.

While policy terms, conditions and exclusions still apply, some customers choose all risks policies when seeking broader protection.

An example scenario: Accidental damage to original listed building features

You are carrying out routine decorating in your listed home when a ladder slips and damages an original hand-carved staircase. The staircase requires specialist restoration using traditional materials and craftsmanship, with repair costs amounting to £8,000.

Perils-based policy

As the damage was caused by an accident rather than a specifically named peril such as fire, storm or escape of water, the claim may not be covered under a perils-based policy. Unless accidental damage has been specifically included, the policy may not respond.

All risks policy

Accidental damage is often included under an all risks policy, meaning the damage may be covered subject to the policy terms, conditions and exclusions. This may help towards the cost of specialist repairs required to restore the original feature. For owners of historic homes, these repairs can involve specialist craftspeople, traditional materials and conservation requirements that can significantly increase the overall cost of a claim.

Why this matters for owners of listed properties

For owners of listed properties, understanding the difference between a perils-based policy and an all risks policy can be particularly important. Listed homes often contain unique architectural features, historic materials and specialist craftsmanship that can be costly and time-consuming to repair or replace.

Unlike many modern properties, repairs to a listed building may require specialist restoration techniques, traditional materials and skilled craftspeople to meet conservation requirements. Even seemingly minor damage can result in substantial repair costs and lengthy restoration projects.

It is also important to ensure your insurer fully understands the property being insured. Features such as previous alterations, specialist materials, listed outbuildings or ongoing renovation work can all affect how a policy responds. Our guide to The importance of disclosure when insuring your listed building explains why providing accurate information at the outset is essential.

For this reason, some listed property owners choose broader cover that can respond to a wider range of insured events. An all risks approach can help protect not only the building itself, but also valuable contents, collections and personal possessions that may be difficult or expensive to replace.

As with any insurance policy, it is important to review the terms, conditions and exclusions carefully to ensure the cover reflects the unique characteristics and risks associated with your property.

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Key differences for listed property owners to consider

The key difference between perils-based and all risks insurance lies in how cover is defined. Perils-based policies cover specific named causes of loss or damage, while all risks policies generally cover losses unless they are specifically excluded.

Reviewing the scope of cover carefully can help identify potential gaps before a claim arises.

Whether you’re already living in a listed home or purchasing one for the first time, understanding your insurance options can help you make a more informed decision. If you’re in the process of buying a historic property, our guide on When and how to secure listed property insurance when buying a listed home explains what to consider before completion and when cover should be arranged.

How Abode can help

At Abode, we specialise in arranging insurance for listed and character properties. We understand that historic homes often come with unique features, specialist construction materials and restoration requirements that may not be adequately reflected in standard home insurance policies.

Our experienced team can help you understand the differences between policy options, review your existing arrangements and ensure your cover reflects the specific needs of your property.

If you’d like advice on your current level of cover or would like a quote, please contact the specialist team at Abode on 01622 476 433.