What is Property All Risks (PAR) Insurance? A Comprehensive Guide
When it comes to insuring your home or business, many standard policies can leave you feeling anxious. They often list a specific set of perils that are covered, leaving you to wonder what would happen if a type of damage not on that list occurred. This is where Property All Risks (PAR) insurance offers a more comprehensive solution.
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| What is Property All Risks (PAR) Insurance? A Comprehensive Guide |
PAR insurance is a type of policy that operates on a fundamentally different principle than a traditional "named perils" policy. Instead of listing what is covered, a PAR policy covers everything unless it is explicitly excluded. This simple but powerful shift provides a much broader and more comprehensive safety net for your most valuable assets.
The "All Risks" Principle: Broader Protection
To truly understand a PAR policy, it's essential to compare it with its conventional counterpart: the Named Perils policy.
Named Perils Policy: This is a traditional insurance plan. The policy document contains a list of specific events (or "perils") for which you are covered. Examples include fire, lightning, windstorm, and theft. If a fire damages your home, you are covered. If water damage from a burst pipe is not on the list, your claim will be denied.
Property All Risks (PAR) Policy: This policy works in the opposite way. It provides coverage for all risks of physical loss or damage to your property, with the exception of those risks that are specifically listed in the exclusions section. The burden of proof shifts from the policyholder to the insurer. If your property is damaged, the insurer must prove that the cause of loss is on the exclusion list to deny the claim.
This difference provides immense peace of mind, as you are protected from a wide range of unexpected and unusual events that may not be accounted for in a standard policy.
What Is Typically Covered by a PAR Policy?
A PAR policy covers all the common perils found in a named perils policy, but it also extends to a variety of events that might otherwise be overlooked. This includes:
Common Perils: Fire, explosions, lightning, windstorms, and vandalism.
Accidental Damage: This is a key advantage. It can cover things like a kitchen fire from a cooking mishap, a pipe that suddenly bursts and causes water damage, or a car accidentally driven into the side of your building.
Theft and Robbery: Loss from criminal acts is covered.
Falling Objects: Damage from a tree or a satellite dish falling onto your property.
Vandalism: Malicious damage to your property.
Unusual Events: A PAR policy would typically cover damage from an accidental impact, such as a crane falling onto your roof, an event that might not be named in a standard policy.
The Exclusions: What "All Risks" Doesn't Cover
While the name "All Risks" sounds all-encompassing, it is not. Every PAR policy has a specific list of exclusions that you must understand. These are generally risks that are considered uninsurable on a broad scale or are meant to be covered by other types of insurance. Common exclusions include:
Catastrophic Natural Disasters: Damage from floods and earthquakes are almost always excluded and require a separate, specialized insurance policy.
Wear and Tear: Damage caused by the natural aging of the property, rust, corrosion, or lack of maintenance is not covered. Insurance is for sudden, unforeseen events, not for gradual deterioration.
Intentional Acts: Damage caused by the deliberate actions of the policyholder or a resident is not covered.
War and Nuclear Hazards: These are standard exclusions in almost all insurance policies.
Pollution and Contamination: The cost of cleaning up pollution or contamination is typically excluded.
Pest and Insect Damage: Damage from termites, rodents, and other pests is considered a maintenance issue and is not covered.
Conclusion
Property All Risks (PAR) insurance offers a superior and more comprehensive level of protection than a traditional named perils policy. By shifting the focus from what is covered to what is excluded, it provides a much broader safety net against a wider range of unforeseen events. While it is not a truly "all risks" policy, as its name might suggest, it offers a crucial layer of peace of mind. For homeowners and business owners looking for robust protection for their most valuable assets, a PAR policy is an option worth serious consideration.
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