All-perils property insurance generally covers fortuitous direct physical loss or damage to insured property during the policy period unless an exclusion applies. It does not cover literally every loss. The insured must first bring the claim within the policy’s initial coverage grant; the insurer then bears the burden of proving an exclusion, and the insured bears the burden of proving an exception that restores coverage.
“All perils” describes a coverage structure
An all-perils or all-risks form begins with a broad grant rather than a closed list of causes such as fire, lightning or explosion. The actual grant may still require direct physical loss or damage, covered property, an insured location and a fortuitous event during the policy period.
The Supreme Court of Canada described the proof sequence in Canadian National Railway Co. v. Royal and Sun Alliance Insurance Co. of Canada: the insured establishes initial coverage, the insurer proves an exclusion, and the insured proves an exception to the exclusion.
That sequence is more accurate than saying the insured always starts from coverage or that uncertainty automatically favours the policyholder.
Named-perils coverage starts with a listed cause
Under a named-perils form, the insured generally must show that the loss resulted from a peril named in the policy. Under an all-perils form, the insured does not need to fit the cause into a closed list, but still must prove the initial coverage elements.
The companion guide to named-perils versus all-risk insurance explains how to identify and compare the two structures. Neither label tells you the limit, valuation method, deductible or exclusions.
Exclusions define much of the real scope
Commercial all-perils forms may address or exclude losses involving:
- wear and tear, corrosion or gradual deterioration
- inherent vice or latent defect
- faulty design, material or workmanship
- flood, surface water or sewer backup
- earthquake or earth movement
- pollution or contamination
- mechanical or electrical breakdown
- data, cyber events or loss of use
- dishonesty, inventory shortage or unexplained disappearance
- intentional or illegal acts
This is not a universal list. An endorsement can add, remove or rewrite an exclusion, and definitions can change how it operates.
Resulting-damage language can preserve part of a claim
A faulty-workmanship or design exclusion may contain an exception for resulting physical damage. Whether the exception applies depends on the wording and the relationship between the excluded defect and later damage.
In Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., the Supreme Court interpreted a builder’s-risk exclusion and resulting-damage exception in its specific contract and construction context. It does not create one outcome for every property form. Identify the cost of correcting the defect separately from damage allegedly caused by it.
Common gaps may be bought back or insured elsewhere
Flood, earthquake, equipment breakdown, cyber loss, crime and business interruption may require endorsements or separate coverage. Even where physical damage is insured, business-interruption coverage usually has its own trigger, waiting period, calculation and period of indemnity.
Ask what happens to:
- stock, customer property and property off premises
- equipment in transit or at temporary locations
- debris removal and professional fees
- code-upgrade and bylaw costs
- spoilage and utility interruption
- newly acquired property
- limits, sublimits, deductibles and co-insurance
Document the initial coverage elements
After a loss, preserve photographs, video, damaged property, maintenance records, inventory, invoices and the timeline. Notify the insurer promptly and take reasonable steps to prevent additional damage without destroying evidence.
The proof of loss should establish the insured property, timing, direct physical loss or damage, value and claimed expense. The precise cause may remain under investigation, but known facts should be reported accurately rather than shaped around a presumed exclusion.
If the insurer relies on an exclusion, ask it to identify the wording and facts. Then check every definition, exception and endorsement that modifies that provision.
A practical policy comparison
Before renewal, place the declarations, property form, exclusions and endorsements side by side. For each important scenario, ask:
- Is the property and location insured?
- What initial physical-loss or damage requirement applies?
- Is the cause named, broadly covered or excluded?
- Does an exception restore resulting damage?
- What limit, sublimit, deductible and valuation term applies?
- Is time-element loss covered separately?
All-perils coverage is broader by structure, not unlimited by promise. Its value lies in the breadth of the initial grant after every definition, exclusion and endorsement is applied to the actual loss.