Though they cover a lot, all-risk insurance policies feature a few frequent exclusions that restrict the protection given. Among the most obvious exclusions are damage resulting from earthquakes and floods. Usually excluded from conventional all-risk plans are certain natural disasters. Hence, property owners must get supplemental coverage to guard against them. Since both floods and earthquakes can cause significant and expensive damage, this exclusion is very important.
Another often ignored factor is normal wear and tear. All-risk plans exclude damage from the slow degradation of property over time—that is, from old roofs, worn-out pipes, or malfunctioning electrical systems. Insurers want property owners to keep their assets; any problems resulting from neglect or inadequate maintenance are not covered. Related to this, especially in cases of long-term problems like slow leaks or inadequate ventilation, mold, mildew, and fungus are commonly avoided. Although some insurers provide endorsements for mold coverage, often there are tight restrictions.
Moreover excluded from all-risk rules are intentional behaviors. Should a policyholder purposefully destroy their property—say, by arson—the insurance will not pay for the damage. Likewise, any false claims or attempts at insurance fraud will cause coverage to be denied. Generally excluded also are acts of war, terrorism, and civil disturbance. Although certain plans may provide optional endorsements for particular kinds of civil disturbance or terrorism-related damage, these situations represent major financial hazards that insurers are reluctant to cover under normal insurance.
Furthermore, excluded from all-risk plans are government actions like property confiscation and losses connected to nuclear threats, including radiation or radioactive contamination. Usually, these hazards are judged as too erratic and severe for regular insurance coverage. Two further exclusions often seen in all-risk policies are pollution and contamination. Unless a separate environmental or pollution liability coverage is bought, environmental damage—gradual or sudden—such as chemical leaks or oil spills—usually is not covered.
Although all-risk insurance offers great protection, it's crucial to know these exceptions. Property owners should carefully go over their policies to make sure they understand what is not covered and think about extra insurance for particular hazards excluded, such as flood, earthquake, or environmental damage.